Advance Tax Under Income Tax Act 2025: Advance tax is when you pay some of your income tax before the year ends. You do not wait until the final tax payment is due. If your tax amount is ₹10,000 or more after TDS is reduced, you may have to pay advance tax.
These rules are now covered under the Income Tax Act, 2025. The new law started on April 1, 2026. Tax Year 2026-27 covers income earned from April 1, 2026 to March 31, 2027. The rules also apply to the tax years that come after it.
The PIS Advantage: Ensuring Tax-Compliant Repatriation of Your Indian Gains
Who Needs to Pay Advance Tax?
If the tax you expect to pay for the year is ₹10,000 or more after reducing TDS and other eligible tax credits, you generally have to pay advance tax.
Salaried people often do not need to make separate advance tax payments when their employer deducts enough TDS from their salary. However, they may still have to pay advance tax if they earn other income such as bank interest, rent, bonds or capital gains and their final tax liability crosses the required limit.
A resident senior citizen who is 60 years or older can get an exemption from advance tax if they do not have income from a business or profession.
Advance Tax Due Dates for 2026-27
For most taxpayers, advance tax is divided into four payments during the tax year:
- By June 15: At least 15% of the total advance tax should be paid
- By September 15: The total payment should reach at least 45%
- By December 15: The total payment should reach at least 75%
- By March 15: The full 100% of the advance tax should be paid
People using the specified presumptive taxation scheme have a different rule. They generally need to pay the full advance tax amount in one instalment by March 15.
How to Work out your Advance Tax?
Start by adding all the income you expect to receive during the year. This can include salary, business income, professional income, rent, interest, capital gains and income from other sources.
Next, apply the deductions and rebate available to you and calculate the tax under the tax regime you are using. Add surcharge where applicable and the 4% health and education cess. Then reduce eligible tax reliefs, TDS, TCS and advance tax already paid. Eligible MAT or AMT credit can also be considered.
Received an Income Tax Notice? Here’s Why You Should Authenticate It and How to Do It Online
The amount left after these adjustments is the advance tax that may need to be paid. Your estimate does not have to remain the same for the whole year. If you earn more money later in the year, you can recalculate your expected tax and increase the remaining instalments. Capital gains can also be included when calculating advance tax. If a capital gain happens after an earlier instalment date, the related tax can generally be adjusted in the later instalments.
Other Important Advance Tax Rules
Advance tax can be paid from another person’s bank account. But the payment challan should carry the PAN of the taxpayer for whom the tax is being paid.
After making the payment, it can take around 3 to 4 working days for the amount to appear in Form 26AS after the bank uploads the payment details.
Before paying, check your PAN, Tax Year, payment category and the amount carefully. For Tax Year 2026-27, advance tax payments are made under the Income Tax Act, 2025 through the new tax-payment system.
