Advance Tax Deadline This Week: Taxpayers May Face 1% Monthly Interest If Missed

Taxpayers must keep track of key tax deadlines as the financial year nears its close. The March 15 advance tax deadline is the last opportunity to pay the final instalment of advance tax for FY 2025–26.

Taxpayers whose estimated tax liability exceeds ₹10,000 must complete the payment before this Advance tax deadline to avoid interest charges on the outstanding amount.

What is Advance Tax?

Advance tax is the income tax that taxpayers pay in instalments during the financial year instead of paying the entire amount at once at the end of the year.

Who Needs to Pay Advance Tax?

Under Section 208 of the Income Tax Act, a taxpayer whose estimated total tax liability is ₹10,000 or more after adjusting TDS/TCS, they are required to pay advance tax in installments. 

Know the difference between TDS and TCS!

This rule applies to all types of taxpayers. These include salaried individuals, freelancers, and businesses.

Senior citizens aged 60 years or above are exempt from paying advance tax if they do not have income from business or profession during the financial year. However, senior citizens who earn income from a business or profession are required to pay advance tax.

Advance Tax Dates for FY 2025–26

Advance tax is paid in instalments across the financial year, allowing taxpayers to spread their payments instead of paying the full amount at once. 

The advance tax dates are as follows:

• June 15: Minimum 15 percent of total tax liability must be paid.
• September 15: After deducting taxes already paid, ensure 45 percent (cumulative) of advance tax is paid.
• December 15: After deducting earlier payments, ensure 75 percent (cumulative) of advance tax is paid.
• March 15: Deduct taxes already paid and clear the remaining advance tax balance.

The Advance tax last date, March 15, is therefore the final opportunity for taxpayers to clear their advance tax liability for the financial year.

What happens if You Miss the Advance Tax Deadline?

If taxpayers fail to pay advance tax by the required advance tax dates, the following consequences may apply:

• Interest under Section 234C: Interest is charged at 1 percent per month on the unpaid tax amount for the period of delay.
  
• Interest under Section 234B: Additional interest may apply until the date of the actual payment.
  
• 90 percent tax payment rule: If a taxpayer fails to pay at least 90 percent of the total assessed tax by March 31, interest under Section 234B at 1 percent per month will apply from April 1 of the assessment year until the actual payment date.
  
• Additional interest liability: This interest is charged in addition to the interest already accrued under Section 234C for missing quarterly instalments.
  
• Possible relief condition: Taxpayers who ensure that 90 percent or more of their tax liability is paid by March 31 may avoid the levy of interest under Section 234B. However, interest under Section 234C for shortfall in earlier instalments may still apply depending on the circumstances.

How to Calculate Your Final Advance Tax Liability

Taxpayers should carefully calculate their tax liability before the Advance tax last date to avoid penalties. 

The steps include:

• Estimate total income: Include salary, business profits, capital gains, and income from other sources such as fixed deposit interest.
• Apply deductions: Subtract eligible deductions under Section 80C, Section 80D, and other applicable provisions.
• Calculate gross tax: Compute tax based on the chosen tax regime, either the Old Tax Regime or the New Tax Regime.
• Deduct TDS/TCS: Subtract all taxes already deducted or collected at source.
• Final check: Ensure that by March 15, the total advance tax paid equals 100 percent of the calculated net tax.

How to Pay Advance Tax

Taxpayers can pay advance tax online through the Income Tax e-filing portal by following these steps.

• Visit the Income Tax e-filing portal and log in using your user ID and password.
• After logging in, go to e File and select e Pay Tax.
• Click on New Payment in the top right corner of the page.
• Select Income Tax from the available options, such as TDS payment, equalisation levy, and income tax, then click Proceed.
• Choose Assessment Year 2026–27 and select Minor Head “Advance Tax” (Code 100).
• Enter the required details such as tax amount, surcharge, cess, interest, and other applicable components.
• Select your preferred payment mode and click Pay Now.
• Review the terms and conditions, accept them, and complete the payment.

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Important Tax Deadlines Taxpayers Should Track

Apart from the Advance tax deadline, taxpayers should also keep track of other compliance dates during the financial year, including the TDS filing last date and return filing deadlines.

The TDS deposit deadline for taxes deducted in February 2026 is March 7, 2026. For taxes deducted in March 2026, the deposit deadline is April 30, 2026. Additionally, the final deadline to file correction statements for various past financial years is March 31, 2026 

Missing these dates can lead to penalties or interest, making it important to monitor all tax-related deadlines carefully.

Source: https://www.moneycontrol.com

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