Advance Tax Deadline: The deadline for depositing the third installment of advance tax for the financial year 2025-26 is December 15th. Failure to pay on time could result in interest and penalties under the Income Tax Act, 1961. Advance tax is a tax that is paid in installments throughout the year. It is not paid all at once when filing a return. Therefore, December 15th is a significant date, as 75% of the total tax liability must be deposited by then.
What is advance tax?
If your total annual tax liability (after TDS) is Rs 10,000 or more, you are required to pay advance tax. This is paid in four installments:
June 15: 15%
September 15: 45% (overall)
December 15: 75% (overall)
March 15: 100%
This means that by December 15, the government should receive three-fourths of the estimated tax for the financial year 2025-26.
Who has to pay advance tax?
Salaried employees who have income other than salary.
Rent
bank interest
Freelance Income
capital gains
TDS is deducted only on salary, you have to pay advance tax on other income yourself.
Professional
Doctor, Lawyer, Consultant, CA, Fashion Designer, Freelancer etc.
Small and large business owners and traders
Investors
Those who earn from stocks, mutual funds, F&O, crypto or debt instruments.
Who is exempt?
You don’t have to pay advance tax if your tax liability after TDS is less than ₹10,000. You are a resident senior citizen over 60 years of age and do not own a business/profession. TDS has already been deducted on your entire income.
How to calculate advance tax?
Add up your estimated income for the entire year.
Subtract exemptions and deductions.
Find the total tax by applying the tax slab.
Subtract the TDS deducted till now.
If the balance amount is Rs 10,000 or more, advance tax will have to be paid.
What happens if I miss the due date?
If 75% of the tax is not deposited by December 15th, the department will charge interest under sections 234B and 234C. This interest could prove to be quite heavy for freelancers, consultants, traders, and those earning capital gains.
