Short answer: advance tax is due if your tax for the year is ₹10,000 or more after TDS. It is paid in four instalments — 15%, 45%, 75% and 100% by 15 June, 15 September, 15 December and 15 March — and those are cumulative totals, not quarters. Interest runs from the instalment date, not from the filing deadline, so by the time the return is prepared it has usually already accrued.
Who this catches
Rarely the people expecting it. Three situations produce most of the unexpected liability:
- A salaried person with something else. Salary TDS is computed on salary. It knows nothing about your share sale, your US dividends, or the flat you let out. The moment non-salary income is large enough to push the net tax past ₹10,000, the obligation is live.
- A professional or contractor whose TDS rate is below their slab. Deduction at source is a payment on account, not a settlement.
- Anyone with a one-off gain — property, unlisted shares, a large redemption.
The gateway is Section 404 of the 2025 Act (formerly Section 208): tax payable of ₹10,000 or more, computed after reducing TDS, TCS and reliefs. A resident individual aged 60 or above with no business or professional income is outside it altogether.
The instalments
Section 408 (formerly Section 211):
| Due by | Cumulative advance tax payable |
|---|
| 15 June | 15% |
| 15 September | 45% |
| 15 December | 75% |
| 15 March | 100% |
Cumulative is the word that matters. On an estimated liability of ₹4,00,000:
- By 15 June you need ₹60,000 paid.
- By 15 September you need ₹1,80,000 in total — so ₹1,20,000 more, not another ₹60,000.
- By 15 December, ₹3,00,000 in total.
- By 15 March, the whole ₹4,00,000.
Reading each date as a fresh quarter is the single most common computational error, and it under-pays every instalment after the first.
Under presumptive taxation the position is simpler: Section 408(2) permits the entire liability in one instalment by 15 March. Whether presumptive taxation applies to you at all — and the five-year lock-in that comes with it — is worked through in Section 44AD or regular books, which carries a self-check.
What a miss costs
Two distinct charges, routinely confused:
- Section 424 (formerly 234B) — 1% per month, simple, where less than 90% of the assessed tax was paid before the year ended. This is the shortfall charge on the year as a whole.
- Section 425 (formerly 234C) — 1% per month for deferring an individual instalment: three months for a June, September or December shortfall, one month for March.
Both can apply to the same year. Neither is discretionary, and neither is waived for not having realised.
The March capital gain problem
The obvious objection is a fair one: how can anyone pay in June an instalment on a gain that only arises in March?
They cannot, and Section 408 says so. Where income could not reasonably have been foreseen, no Section 425 interest arises provided the tax on it is paid in the instalment falling due after the income arises, or by 31 March. The categories are specific:
- Capital gains
- Casual income — lotteries, crossword puzzles, races
- Income from a business or profession of a first-time nature
- Dividends
Two conditions on that relief are worth being precise about. It applies to the listed categories, not to a general underestimate of ordinary income. And it is conditional on paying promptly once the income arises — it defers the obligation to the next instalment, it does not remove it.
What to work from
- Income for the year to date, by head
- A defensible estimate for the remainder
- TDS and TCS already deducted — from Form 26AS and the AIS
- Advance tax already paid, with challan details
- Losses available to be set off
Where the income is foreign dividends, tax withheld abroad reduces the Indian liability and therefore the instalment — but only if the credit is actually claimed, which is a separate filing. See how to file Form 67.
Which Act applies
For tax year 2026-27 onwards, the 2025 Act: Sections 403 to 408 for advance tax, 423 to 425 for interest. For AY 2026-27 (FY 2025-26) and earlier, the 1961 Act continues under the savings provision: Sections 207 to 211, and 234A to 234C. The dates and the percentages did not change — only the numbering. The wider mapping is in the old vs new section number guide.
This is a working reference, not the statute. Confirm the current threshold and rates against the Finance Act for the year before computing an instalment.