Final Call: Pay your advance tax instalment by March 15 to avoid penalties 

March 15 is the due date for the payment of the fourth and final installment of advance tax

The due date for paying your final advance tax instalment for FY24-25 is here. March 15th.

Any individual whose estimated tax liability is likely to be over Rs 10,000 (after considering tax deducted and collected at source — TDS and TCS) is required to pay advance tax that year, per section 208 of the Income-Tax (I-T) Act. This includes salaried taxpayers. Even though their employers withhold tax from their salaries, advance tax needs to be paid on other income such as capital gains and interest on fixed deposits.

Resident senior citizens who do not draw any income from business or profession are exempted.

Advance tax is to be paid before the end of the financial year on the income that you would have earned that year.

Pay in tranches

Per I-T rules, you have to clear your advance tax dues in four instalments — on June 15, September 15, December 15, and March 15 of the financial year.

In the case of salaried individuals, employers deduct tax before depositing their salaries at the end of the month. However, they do not take into account several other sources of the employee's income, such as rent, interest from deposits, capital gains on the sale of shares and mutual fund units, and so on. On your part, when you compute your advance tax liability, you need to factor in these as well.

Taxpayers are required to pay 15 percent of their estimated advance tax liability by June 15 (Q1). By September 15 (Q2), you should have paid 45 percent of the total amount due, 75 percent by December 15 (Q3), and 100 percent by March 15 (Q4).

However, if you are a self-employed businessperson or professional who has opted for the presumptive taxation scheme, the rules are different. Such individuals, too, have to pay advance tax, but they are allowed to make the payment in one go in the last quarter of the financial year, by March 15. This flexibility is provided after accounting for the challenges that small businesses may face while estimating their advance tax liability at the beginning of the financial year.

Also read: Advance tax: Payment due date, penalties for missing the deadline and more

To pay your dues, you need to log on to www.incometax.gov.in If you haven’t done so already, you need to first register yourself using your PAN. Next, click on 'e-pay tax' under the 'Quick Links' menu on the left-hand side of the website. Follow the instructions to confirm your PAN, enter the OTP, and select the right assessment year (2025-26) when you are paying advance tax for the financial year 2024-25. Select  'Advance Tax (100)' as the 'Type of payment'.  Click on 'Continue', enter the details, and proceed to make the payment and complete the process.

Missed advance tax payments? Brace for penal interest

Paying advance tax is mandatory for those with an estimated tax liability of over Rs 10,000 during the financial year.

If you fail to adhere to the rules and due dates, you may have to pay a penalty. You will have to pay simple interest of 1 percent per month on the under-payment or non-payment of advance tax by the due date, till the amount is paid.

Do note, however, that the penal interest will come into play only if the advance tax paid is less than 12 percent and 36 percent of the advance tax due by June 15 and September 15, respectively. The penalty will also be levied if the advance tax paid is less than 75 percent and 100 percent of the due amount by December 15 and March 15, respectively.

Also read: Coming soon: March 15 is last deadline to pay advance tax

If you miss the last instalment, March 15, you can still clear your dues by March 31, but you have to cough up interest for a month, per section 234C of the I-T Act.

However, if you decide to clear your tax liability at the time of filing your income tax returns (ITR), before July 31 (the due date for filing the ITR for the previous financial year), you will have to pay an additional four percent by way of penal interest for four months, under section 234B.