Advance Tax is the income tax paid in installments during the financial year instead of a lump sum at the end of the year. As per Section 208 of the Income Tax Act, any taxpayer whose total tax liability for the financial year exceeds ₹10,000 must pay Advance Tax. Salaried employees usually don't need to pay Advance Tax separately as TDS is deducted by the employer. However, self-employed professionals, business owners, freelancers, and individuals with significant income from capital gains, rent, interest, or dividends must pay Advance Tax. Senior citizens (above 60 years) with no business or professional income are exempt from Advance Tax.

Advance Tax must be paid in four installments as per Section 211 of the Income Tax Act: 1st installment — 15% of total tax by June 15th, 2nd installment — 45% of total tax (cumulative) by September 15th, 3rd installment — 75% of total tax (cumulative) by December 15th, 4th installment — 100% of total tax (cumulative) by March 15th. For taxpayers opting for presumptive taxation under Section 44AD or 44ADA, a single installment of 100% must be paid by March 15th. Missing any deadline triggers interest under Section 234C on the deferred amount.

Section 234C imposes interest at 1% per month (or part of a month) on the amount of Advance Tax shortfall for each installment. The interest is calculated on: 15% of tax minus amount paid by June 15 (if shortfall exceeds 10% of installment), 45% of tax minus amount paid by September 15, 75% of tax minus amount paid by December 15, and 100% of tax minus amount paid by March 15. The interest period runs from the due date of the installment to the date of actual payment or March 31, whichever is earlier. For example, if your total tax is ₹2,00,000 and you pay nothing by June 15, interest is charged at 1% per month on ₹30,000 (15% of ₹2,00,000) for 3 months (June to September) = ₹900.

Section 234B imposes interest at 1% per month (or part of a month) if: (1) Advance Tax is not paid at all, or (2) the Advance Tax paid by March 31 is less than 90% of the total tax liability. The interest is calculated on the shortfall amount (total tax minus Advance Tax paid) from April 1 of the assessment year until the date of actual payment of tax (including self-assessment tax). For example, if your total tax is ₹3,00,000 and you paid only ₹2,00,000 as Advance Tax, the shortfall of ₹1,00,000 attracts interest at 1% per month from April 1 until you pay the remaining amount. This interest is in addition to any Section 234C interest already charged.

To calculate Advance Tax, estimate your total income for the financial year, apply the applicable tax regime slab rates, add surcharge and 4% cess, and subtract TDS/TCS already deducted. Under the Old Tax Regime: apply slab rates (0-30%), claim deductions like Section 80C (₹1.5 lakh), 80D, HRA, LTA, and home loan interest (Section 24b). Under the New Tax Regime (Section 115BAC — default from FY 2023-24): apply lower slab rates (0-30% with ₹75,000 standard deduction), most deductions are not available. The Advance Tax Calculator computes your estimated tax under both regimes, shows the quarterly installments, and highlights which regime saves more tax.

Yes, Advance Tax is applicable on capital gains and all other income including lottery winnings, rental income, and interest income. However, since capital gains are often unpredictable and may arise at any time during the year, the Income Tax Department allows taxpayers to pay the Advance Tax installment in the quarter in which the capital gain arises. For example, if you sell a property in November and make a ₹20 lakh capital gain, you should pay the Advance Tax on this gain by the December 15th installment (75% cumulative). No interest under Section 234C is charged if the remaining installments are paid on time after the gain arises.

Advance Tax can be paid online through the Income Tax Portal (incometax.gov.in) or NSDL/TIN-NSDL portal (tin-nsdl.com). Steps: (1) Log in to the Income Tax Portal and go to e-Pay Tax, or visit NSDL directly, (2) Select Challan 280, (3) Enter your PAN, select Assessment Year, choose 'Advance Tax (100)' as type of payment, and select your bank, (4) Make payment via net banking, debit card, or UPI, (5) Save the challan receipt for ITR filing. The challan details automatically reflect in Form 26AS and AIS within a few days. Payment can also be made at authorized bank branches using physical Challan 280.

If you pay more Advance Tax than your actual tax liability, the excess amount is refunded by the Income Tax Department after you file your ITR. The refund carries interest at 0.5% per month (Section 244A) from April 1 of the assessment year until the date of refund. However, if the excess payment is due to your own estimate being higher than actual tax, interest under Section 244A is paid only if the refund exceeds 10% of the total tax liability. To avoid excess payment, use the Advance Tax Calculator to estimate your liability accurately and adjust subsequent installments if your income estimate changes during the year.