Advance Tax Computation Under explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
1. What is Advance Tax?
Advance tax is income tax paid in instalments during the Tax Year — before filing the ITR — on estimated income for that year. If total tax liability (after TDS) exceeds Rs 10,000 in a Tax Year, the taxpayer must pay advance tax. Non-payment or under-payment of advance tax attracts interest under Sections 417 and 418 of ITA 2025.
2. Advance Tax Instalments: Due Dates
| Instalment | Due Date | Minimum Amount |
|---|---|---|
| 1st instalment | 15 June 2026 | 15% of annual estimated tax |
| 2nd instalment | 15 September 2026 | 45% of annual estimated tax (cumulative) |
| 3rd instalment | 15 December 2026 | 75% of annual estimated tax (cumulative) |
| 4th instalment | 15 March 2027 | 100% of annual estimated tax (cumulative) |
3. Who Must Pay Advance Tax
- Any taxpayer with estimated tax liability above Rs 10,000 (after TDS) must pay advance tax
- Salaried employees: employer deducts TDS each month — advance tax is only needed on non-salary income (freelance, capital gains, interest if not covered by TDS)
- Senior citizens (60+) without business/profession income: EXEMPT from advance tax
- Presumptive taxpayers (44AD/44ADA): single instalment by 15 March
4. Estimating Annual Income
Advance tax is based on estimated annual income — not just income earned till the instalment date. At each due date, revise the estimate based on:
- Actual salary received and TDS deducted so far
- Estimated capital gains (from equity sales, property sales planned)
- Business income trends
- Interest income projected for the full year
- Deductions to be claimed
5. Advance Tax on Capital Gains
Capital gains from shares, mutual funds, or property can be sudden and unpredictable. If you sell an asset and have large capital gains, you must pay advance tax by the next instalment deadline. If capital gains arise after 15 March (i.e., in the last part of the Tax Year), advance tax on those gains can be paid by 31 March without any interest under Section 417.
6. Interest for Non-Payment
If advance tax is not paid or is short-paid:
- Section 417 (234C equivalent): 1% per month for 3 months on shortfall at each instalment date
- Section 418 (234B equivalent): 1% per month from 1 April to payment date if total advance tax paid is below 90% of assessed tax
- Example: If assessed tax = Rs 2L, TDS = Rs 50K, advance tax = Rs 1.2L (total = Rs 1.7L = 85%), Section 418 interest applies on Rs 10K shortfall (90% = Rs 1.8L; paid Rs 1.7L)
7. Why TaxClue
Advance tax computation requires estimating annual income accurately — including capital gains and business income. Under-estimation leads to interest. TaxClue provides quarterly advance tax computation and reminders. Contact us under ITA 2025.
Key Facts About Advance Tax Computation Under
- Applies in: All states across India, under the relevant central law.
- Mode: Mostly online via the official government portal.
- Typical timeline: Ranges from a few days to a few weeks depending on the case.
- Non-compliance: May attract penalties, interest or late fees.
- Expert help: TaxClue completes the entire process end to end for you.
What are the advance tax due dates?
For Tax Year 2026-27, advance tax instalment due dates are: 15 June 2026 (at least 15% of estimated annual tax); 15 September 2026 (at least 45% cumulative); 15 December 2026 (at least 75% cumulative); and 15 March 2027 (100% cumulative). Presumptive taxpayers under Section 44AD and 44ADA pay the entire advance tax in one instalment by 15 March 2027. Senior citizens without business income are exempt from advance tax entirely.
When is advance tax required for capital gains?
Capital gains arise on the date of sale. If capital gains occur before 15 March, advance tax should be included in the next instalment computation. If capital gains occur between 15 March and 31 March (the final days of the Tax Year), advance tax on those gains can be paid by 31 March — the last day of the Tax Year — without attracting Section 417 interest. This late-year provision prevents undue hardship for unexpected capital gains.
Over 90% of compliance penalties in India arise from missed due dates — timely handling can save businesses thousands of rupees each year.
Advance Tax Computation Under: a key compliance topic in Indian tax and corporate law that businesses and individuals must understand to remain compliant.