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Advance tax Payment

Advance tax Payment

Advance tax refers to paying of taxes as and when you earn, or paying taxes in accordance with your income flow rather than waiting till the financial year gets over.

The deadline for filing income tax returns for the financial year (FY) 2014-15 just got over. Now it is time to do the needful for the current financial year, i.e., 2015-16. The first thing that individual tax payers have to do is pay the first instalment of advance tax by 15 September. Here is a look at what all you need to know about advance tax.


Advance tax refers to paying of taxes as and when you earn, or paying taxes in accordance with your income flow rather than waiting till the financial year gets over. If the estimated tax on an individual assessee’s income exceeds Rs.10,000, she should pay advance tax as stipulated. One needs to pay 30% of the tax by 15 September of the relevant FY, 60% by 15 December and the rest by 15 March.


You can pay the advance tax using tax payment challans (challan no. 280) at bank branches authorised by the Income Tax Department. You can even pay it online. Logon to the income tax department’s website,, and click on e-Pay taxes on the right side. You will then be directed to the National Securities Depository Ltd (NSDL) website. Click on challan number 280, fill the required details and make the payment.


If you do not pay the advance tax due as per the schedule, interest will be levied on the due amount. According to section 234(c) of the Income-tax Act, 1961, if you miss any of the advance tax deadlines, you will have to pay 1% interest per month till the next instalment, i.e., for three months.

Let’s take an example. If the tax liability on your income for FY16 is estimated to be Rs.1.5 lakh, you will have to pay an advance tax of Rs.45,000 (30% of Rs.1.5 lakh) by 15 September 2015. You have to subtract any tax that has been deducted at source from the instalment amount, and pay the rest.

However, what if you forget to pay the advance tax amount by 15 September? Assuming that there was no tax deducted at source, in such a case, you will have to pay Rs.45,000 plus 1% simple interest per month for three months, which would be Rs.1,350 (3% of Rs.45,000). This amount can be paid along with the second instalment that is due on 15 December.

If you miss the 15 December deadline as well, you will have to pay 1% interest on the tax due for the first instalment for six months (till the next deadline of 15 March) when you file the final instalment, and 1% interest for three months on tax due from the second instalment. In the above example, your penal interest would come to Rs.4,050. So, the total advance tax payable by 15 March would become Rs.1,54,050 (Rs.1.5 lakh + Rs.4,050).

So, make sure you pay the advance tax as per the schedule to avoid paying unnecessary interest.

Advance tax Payment


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