If your net income-tax liability exceeds Rs 10,000 in a financial year, you are required to pay advance tax in four installments as per the Income Tax Act, 1961. Net tax liability refers to the estimated tax due after adjusting for TDS. While this rule applies to most taxpayers, the law also provides key exemptions for specific categories of individuals.Under Section 211 of the Act, advance tax is payable in four quarterly tranches between June 15 and March 15 of the same financial year. Taxpayers under the presumptive taxation scheme, however, are allowed to make a single consolidated payment by March 15, according to an ET report.Chartered Accountant Bharat D Sarawgee of NRI Nivesh said resident senior citizens aged 60 and above are fully exempt from paying advance tax if they do not have income from business or profession. “This holds true even if their total tax liability exceeds Rs 10,000; no advance tax is required for such senior citizens,” he said.Salaried individuals whose tax liability is entirely covered by TDS also do not need to pay advance tax, provided they have no other taxable income apart from salary income.
Advance tax payment on incomes that can’t be estimated in advance
Some incomes cannot be projected ahead of time, and the Act allows taxpayers to pay advance tax on such income in the next quarter after the income is actually earned. Capital gains on listed equity shares are a common example.“Individuals having certain specific income sources are exempted from payment of advance tax in advance. The advance tax on these incomes can be paid in the next quarter,” said Chartered Accountant Manas Chugh, head – regulatory services at Osgan Consultants, ET quoted him as saying.According to the law, advance tax for the following income categories may be paid in the subsequent quarter:
- (a) Capital gains
- (b) Winnings from lotteries, crossword puzzles, races including horse races, card games and other games
- (c) Income under the head “Profits and gains of business or profession” when such income arises for the first time
- (d) Dividend income (excluding deemed dividends)
Chugh added: “The first proviso of sub-section (1) of Section 234C aims to shield taxpayers from the imposition of penal interest in situations where the precise calculation of advance tax liability is not feasible. Therefore, in the above-mentioned incomes, advance tax is required to be paid only when the actual income is earned.”
Advance tax deadlines for FY 2025-26 (AY 2026-27)
For FY 2025-26, the four installments fall on June 15, September 15, December 15, and March 15.A crucial point is that advance tax is payable only if the net tax liability after TDS exceeds Rs 10,000. If the net liability is below this threshold, advance tax is not mandatory. If it is Rs 10,000 or more, advance tax must be paid.
