Advance Tax Under Income Tax Act 2025: Due Dates, Calculation, and Payment Guide

The first advance tax installment under the Income Tax Act, 2025, is due on June 15, 2026. This is the first advance tax cycle operating entirely under the new Act, which replaced the Income Tax Act, 1961, with effect from April 1, 2026 (Tax Year 2026-27). The advance tax framework is set out in Sections 403 to 405 of the new Act, with the quarterly installment schedule remaining unchanged from the previous regime. This guide explains who must pay, how to calculate the amount, and the process for payment.

Who Must Pay Advance Tax

Under Section 403 of the Income Tax Act, 2025, advance tax is payable during the tax year on the current income of the assessee. Under Section 404, the obligation to pay advance tax arises if the estimated total tax liability for the year, after deducting TDS and TCS already credited, is Rs 10,000 or more. This threshold applies to all categories of taxpayers: individuals, HUFs, firms, LLPs, and companies. However, Section 403 exempts resident individuals aged 60 years or more who do not have income from business or profession; such senior citizens are not required to pay advance tax.

Quarterly Installment Schedule

The advance tax must be paid in four quarterly installments during the tax year. The schedule is as follows: 15 percent of the total estimated tax liability is due by June 15; a cumulative 45 percent is due by September 15; a cumulative 75 percent is due by December 15; and the full 100 percent is due by March 15 of the following year. For taxpayers opting for the presumptive taxation scheme (applicable to certain professionals and small businesses), the entire advance tax may be paid in a single installment on or before March 15.

How to Calculate Advance Tax

Under Section 405 of the Income Tax Act, 2025, the computation follows the formula: A = B minus C, where A is the advance tax payable, B is the income tax on the estimated total income at the applicable rates, and C is the amount of TDS and TCS expected to be deducted or collected on the assessee's income during the tax year. In practice, this means estimating total income for the year, computing tax at the applicable slab rates (including surcharge and health and education cess), and subtracting the TDS and TCS credits expected to be available.

How to Pay: Step-by-Step Process

Advance tax is paid online through the Income Tax Department's e-filing portal at incometax.gov.in or through authorised bank portals. The steps are as follows. First, visit the e-Pay Tax section of the portal and select Income Tax as the tax type. Second, select Advance Tax (code 100) as the type of payment. Third, select the relevant assessment year (Assessment Year 2027-28 for Tax Year 2026-27). Fourth, enter the amount of tax to be paid. Fifth, choose the payment method (net banking, debit card, or payment through authorised banks). Sixth, upon successful payment, a challan receipt with a BSR code and challan serial number is generated, which must be retained for filing the income tax return.

Penalties for Non-Payment or Short Payment

Missing the advance tax deadline attracts interest under the relevant provisions of the new Act. Interest at the rate of 1 percent per month (or part of a month) is levied on the shortfall for each quarter where the advance tax paid is less than the prescribed percentage. This interest accrues from the due date of the installment until the date of actual payment or filing of the return, whichever is earlier. The interest is calculated on the difference between the amount that should have been paid and the amount actually paid.

Key Takeaways

Advance tax provisions are in Sections 403 to 405 of the Income Tax Act, 2025. The liability threshold is Rs 10,000 of estimated tax after TDS and TCS. The first quarterly installment (15 percent) is due by June 15, 2026. Senior citizens aged 60 or above without business income are exempt. Payment is made online through the e-filing portal under code 100 (Advance Tax). Interest at 1 percent per month applies to short payments or missed deadlines. The computation formula under Section 405 is: advance tax = income tax on estimated total income minus TDS and TCS credits.