What is advance tax?

Advance tax is income tax you pay during the year, instead of waiting for the return. It is not a separate kind of tax. It is the same income tax, collected in instalments, so the department is not waiting until July to receive most of the bill.

Section 404 of the Income-tax Act, 2025 says it is due when the tax payable in the year is ₹10,000 or more. That threshold matches the old Act. Tax already deducted at source counts. If your employer’s TDS covers the whole salary bill, and you have no other income, you may have nothing to pay in June. Interest, rent, a professional receipt, or a capital gain can push the uncovered tax over ₹10,000. Then the instalments start.

Section 408 sets four instalments. At least 15% by 15 June, 45% by 15 September, 75% by 15 December, and the rest by 15 March. The percentages are of the year’s advance tax, and each later date includes what you already paid. Someone on the presumptive scheme in section 58 pays the whole amount by 15 March, under section 408(2).

FY 2025-26 instalments were under the 1961 Act, because that income came before 1 April 2026. A shortfall still draws interest under sections 234B and 234C of that Act. FY 2026-27 instalments are under the new Act. The dates did not move.

A worked example

The new-regime bill on salary of ₹15,00,000 is ₹97,500. That is well above ₹10,000. If an employer withholds the whole ₹97,500, advance tax on that salary is nil. If you also book a capital gain and the extra tax is the equity example’s ₹22,750, look at whether TDS already covers the combined bill. The income tax calculator shows a year’s tax. It does not print challans. The filing guide is where those challans go on the return.

A useful check is the June test. Fifteen percent of a ₹97,500 bill is the first instalment if nothing has been withheld. Pay that, then recompute in September if a bonus or a sale changed the year.

Mistakes people make

• Waiting for the return because the salary TDS “usually covers it”, after a year with a property sale or a large FD interest.
• Treating each instalment as a fresh 15%, 45%, 75% of the original estimate and ignoring tax already paid.
• Using the new Act’s section numbers on a FY 2025-26 shortfall. That year’s interest is still sections 234B and 234C.
• Paying advance tax on income that never crossed ₹10,000 after TDS.
• Forgetting the 15 March date because the March salary is still to come. Estimate it.

The section

Section 404 is the ₹10,000 test (the threshold people knew from the 1961 Act). Section 408 is the instalment table. A resident who is 60 or older, with no business or professional income, is outside the duty under section 403(3). The advance tax guide has the dates, that exemption, the single March date for section 58, and a salary example with FD interest and rent. The slab guide helps you estimate the year’s tax before you split it.