Last Date for Advance Tax Payment Approaching: What Taxpayers Should Know
Advance tax is income tax that you pay to the government during the financial year as you earn income. It is generally paid in four instalments, instead of paying the entire tax at the end of the year. For the financial year 2025-26, the fourth and final instalment of advance tax must be paid on or before 15th March 2026. By this date, taxpayers are required to ensure that 100% of their total estimated tax liability for the year has been paid. This final payment completes the advance tax obligation for the financial year.
Due Dates of Advance Tax Payments
The first payment is due by June 15, when a taxpayer must pay at least 15% of the total estimated tax liability. The second instalment is due by September 15, by which time the taxpayer should have paid 45% of the total tax. The third instalment is due by December 15, and the total tax paid by then should reach 75% of the estimated liability. Finally, the last instalment is due by March 15, when the taxpayer must ensure that 100% of the total estimated tax has been paid.
Penalties for missing the deadlines
The following are the penalties of missing the advance tax deadline:
- If advance tax is not paid on time, interest may be charged at 1% per month (12% per annum) under the Income-tax Act.
- Even a delay of just one day can result in interest being charged for a full three-month period.
Consequences of Failure to Deposit Advance Tax
If you fail to pay advance tax according to the prescribed due dates, you may be required to pay additional interest under the Income Tax Act. Interest is generally charged under these two sections:
1. Section 234B: Interest on Non-Payment or Underpayment of Tax
Under Section 234B, interest is charged if you fail to pay at least 90% of your total tax liability before March 31 of the financial year through advance tax or TDS/TCS.
2. Section 234C: Interest Due to Delay in Advance Tax Payment
Under Section 234C, the government charges interest at 1% per month on the amount of advance tax that should have been paid but was not paid on time.