Advance tax: March 15 is deadline of last instalment; what penalty will you pay if you miss it

The Income Tax Department has issued a reminder that the final installment of advance tax for the financial year 2024-25 must be settled by March 15, 2025. This means that only three days, including today, remain until the payment is completed. It is mandatory to settle all outstanding advance tax obligations by the specified date.

According to income tax regulations, taxpayers are required to pay tax in advance if their total tax liability on income from sources other than salary exceeds Rs 10,000 for the financial year. Employers deduct and remit advance tax on salary to the income tax department.

How much tax do I have to pay? Calculate now

The deadline for taxpayers enrolled in the presumptive taxation scheme (Section 44AD / 44ADA) is March 15, 2025. Taxpayers must ensure full advance tax payment for the Assessment Year 2025-26. Additionally, government offices that deduct TDS/TCS for February 2025 should submit Form 24G by the same date.

The IT Department posted on X: “Paying on time not only upholds your compliance with tax regulations but also strengthens the 'Viksit Bharat Movement', contributing to India’s vision of self-reliance and prosperity.”

Advance Tax

Section 208 requires every person whose estimated tax liability for the year is Rs. 10,000 or more to their tax in advance, in the form of “advance tax”. However, a resident senior citizen (i.e., an individual of the age of 60 years or above during the relevant financial year) not having any income from business or profession is not liable to pay advance tax. 

"Advance tax is payable if the total tax liability for the financial year exceeds Rs 10,000. As such, taxpayers with incomes (such as rent, capital gains, dividends, etc.), must pay advance tax if their total liability exceeds Rs 10,000," said CA Dr Suresh Surana.

"However, a resident senior citizen (i.e., an individual of the age of 60 years or above during the relevant financial year) not having any income from business or profession is not liable to pay advance tax," Dr Surana added.

Accordingly, the taxpayers need to pay such advance tax on or before the following mentioned due dates as given below.

Due Date  Advance Tax Liability

On or before 15th June 15% of the assessed tax

On or before 15th September 45% of the assessed tax

On or before 15th December 75% of the assessed tax

On or before 15th March 100% of the assessed tax

"For taxpayers who have opted for presumptive taxation scheme under section 44AD & section 44ADA, the due date for such taxpayers would be payment of 100% of advance tax liability on or before 15th March of the financial year. Failure to pay advance tax may entail interest implications u/s 234B and 234C of the IT Act," Dr Surana added.

Penalty and interest if you fail to pay

Taxpayers failing to pay their advance taxes in due time would be subject to the following interest consequences: -

> Interest u/s 234B of the IT Act

A taxpayer who is liable to pay advance tax u/s 208 of the IT Act has either failed to pay the advance tax or the advance tax paid by the taxpayer is less than 90% of the assessed tax, would be liable to pay a simple interest at 1% per month or part of a month for default in payment of advance tax. Such interest would be computed from the first day of the assessment year, i.e., from 1st April till the date of determination of income under section 143(1) or when a regular assessment is made, then till the date of such a regular assessment. It is pertinent to note that any tax paid till 31st March will be treated as advance tax.

Further, interest would be calculated on the amount by which the advance tax paid falls short of the assessed tax. However, in case the advance tax is not paid at all, the interest would be computed on the entire assessed tax.

> Interest u/s 234C of the IT Act

Section 234C of the IT Act provides for levy of interest for default in payment of installment(s) of advance tax. Such interest would be levied @ 1% simple interest per month or part of a month for short payment/ non-payment of individual instalment(s) of advance tax. Interest u/s 234C in case of deferment of different instalments of advance tax would be levied as follows:

In case of taxpayers opting for presumptive taxation scheme u/s 44AD or 44ADA of the IT Act, interest shall be levied if advance tax paid on or before 15th March is less than 100% of advance tax payable.

"Interest shall not be levied on the shortfall if the taxpayers have paid the minimum amount payable on or before the specified due dates. Also, taxpayer shall not be liable to any interest liability u/s 234C of the IT Act if the shortfall in payment of tax is due to certain specified incomes such as capital gains, casual winnings such as winnings from lottery, crossword puzzles, etc. and the taxpayer pays the required advance tax on such income as a part of immediate following instalments or till 31st March, if no instalment is pending," Dr Surana explained.

Due date of Installment	Amount Payable	Minimum Amount Payable for Non-applicability of Interest u/s 234C of IT Act	Interest Payable u/s 234C of IT Act
On or before 15th June	15%	12%	1% x 3 months x shortfall in tax
On or before 15th September	45%	36%	1% x 3 months x shortfall in tax
On or before 15th December	75%	75%	1% x 3 months x shortfall in tax
On or before 15th March	100%	100%	1% x 1 month x shortfall in tax

Calculating Advance Tax:

Advance tax is payable if your total tax liability for the financial year exceeds Rs. 10,000. It is calculated based on the estimated income for the year and paid in instalments as per the due dates specified by the Income Tax Act. Advance tax can be calculated as follows:

Step 1: Estimate Total Income

Calculate the total expected income for the financial year, including Business/professional income, Salary income, Capital gains, Rental income, Other sources of income (interest, dividends, etc.)

Step 2: Compute Taxable Income

Deduct eligible expenses, deductions (under Chapter VI-A like Section 80C, 80D, etc.), and exempt income to arrive at the taxable income.

Step 3: Calculate Tax Liability

Apply the applicable income tax slab rates for individuals, firms etc. From the gross tax computed, add surcharge (if applicable) and cess (4%) to compute the final tax liability and reduce TDS/ TCS credit and MAT Credit (if applicable) to find the net tax payable.

Step 4: Pay Advance Tax in Instalments

Make payment of advance tax in instalments as aforementioned. Advance tax is paid online via the NSDL website or through authorized banks using Challan No. 280.