Advance Tax Rules 2025: Due Dates and New Sections

If you earn income that is not subject to TDS - such as business profits, freelance income, rental income, or capital gains - you are expected to pay advance tax during the year rather than waiting until filing your return. The old Sections 207 to 211 are now Sections 405 to 407 of the Income Tax Act 2025.

Sections 207-211 → Sections 405-407: What Changed

Who Must Pay Advance Tax

You must pay advance tax if your total tax liability for the year (after TDS) is Rs 10,000 or more. This typically applies to:

• Business owners and self-employed professionals - no employer deducts TDS on your business income
• Freelancers - even if clients deduct TDS, the remaining tax due may exceed Rs 10,000
• Salaried employees with other income - if rental income, capital gains, or interest income creates a tax liability above Rs 10,000 after TDS
• Companies and firms - always required to pay advance tax regardless of amount

Quarterly Due Dates and Percentages

Advance tax is paid in four installments during the financial year:

• June 15 - at least 15% of the estimated total tax for the year
• September 15 - at least 45% of the estimated total tax (cumulative, including the June payment)
• December 15 - at least 75% of the estimated total tax (cumulative)
• March 15 - 100% of the estimated total tax (cumulative, final installment)

For example, if your estimated tax for the year is Rs 1,00,000:

• By June 15: pay at least Rs 15,000
• By September 15: pay at least Rs 45,000 total (Rs 30,000 more)
• By December 15: pay at least Rs 75,000 total (Rs 30,000 more)
• By March 15: pay Rs 1,00,000 total (Rs 25,000 more)

Senior Citizen Exemption

A special exemption exists for senior citizens:

• Resident senior citizens (age 60+) who do not have income from business or profession are exempt from paying advance tax
• This means if you are 60 or older and your income comes from pension, interest, rent, or capital gains (but not business), you do not need to pay advance tax
• You can pay your entire tax liability at the time of filing your return
• No interest penalty under Section 430 or 431 will apply to senior citizens who qualify for this exemption

However, if a senior citizen runs a business or profession, this exemption does not apply - they must pay advance tax like everyone else.

Presumptive Taxation: Single Installment

If you use presumptive taxation under Section 58 (old 44AD/44ADA/44AE):

• Pay 100% of advance tax in a single installment by March 15
• You do not need to follow the quarterly schedule
• No interest penalty for not paying in the earlier quarters

Interest for Non-Payment or Late Payment

Missing advance tax deadlines results in interest charges:

• Section 430 (old 234B) - if you pay less than 90% of your total tax as advance tax, interest at 1% per month is charged on the shortfall from April 1 until you pay
• Section 431 (old 234C) - if you miss or underpay any quarterly installment, interest at 1% per month is charged for 3 months on the shortfall for that quarter
• Interest is simple interest, not compounding
• Interest is calculated on assessed tax minus TDS - only the net tax liability after TDS counts

For example, if you owed Rs 1,00,000 in advance tax and paid nothing by March 31, you will owe 1% per month interest (Rs 1,000/month) from April until you pay, plus quarterly deferment interest.

Frequently Asked Questions

Disclaimer: This article provides general information about the Income Tax Act 2025 and is not tax advice. Consult a qualified Chartered Accountant for advice specific to your situation.