TaxSaral
Sections 403–408Advance Taxwas Sections 208–211 in IT Act 1961

Advance Tax — Obligation and Instalments

If net tax liability (after TDS) exceeds ₹10,000, you must pay advance tax in four instalments: 15% by June 15; 45% by September 15; 75% by December 15; 100% by March 15.

Who this applies to

Self-employed individuals, freelancers, investors, and salaried people with large non-salary income where TDS doesn't cover the full liability.

Key Points

  • The ₹10,000 threshold is on 'net tax liability after TDS' — if your employer deducts sufficient TDS, you may owe nothing.
  • Percentages are cumulative: 45% by September means total paid (including June) must be 45%.
  • Missing or underpaying an instalment attracts interest under Section 425 (3 months per missed instalment).
  • Paying less than 90% of the total tax as advance tax attracts Section 424 interest from April 1 of the assessment year.

Worked Example

1

Freelancer estimating and paying advance tax

Scenario

Suchitra is a freelance designer. She estimates her TY 2026-27 tax liability at ₹1,80,000 after accounting for client TDS deductions of ₹20,000. Net advance tax needed = ₹1,80,000 – ₹20,000 = ₹1,60,000.

Calculation

Total advance tax: ₹1,60,000

Instalment schedule:
  By June 15, 2026:      15% = ₹24,000
  By September 15, 2026: 45% = ₹72,000 (cumulative)
  By December 15, 2026:  75% = ₹1,20,000 (cumulative)
  By March 15, 2027:    100% = ₹1,60,000 (cumulative)

Amounts due each period:
  Jun 15: ₹24,000
  Sep 15: ₹48,000
  Dec 15: ₹48,000
  Mar 15: ₹40,000

Result

Suchitra pays in four tranches. If she misses the June instalment and pays ₹72,000 in September instead (entire first and second instalment together), she owes Section 425 interest on the June shortfall for 3 months.

Related Sections

Section 403Senior Citizens Exempt from Advance Tax
Section 424Interest for Default in Advance Tax
Section 425Interest for Deferment of Advance Tax Instalment
Section 156Tax Rebate — Zero Tax up to ₹12 Lakh

Still have questions about Sections 403–408?

Our tax team can explain how this provision applies to your specific situation.

Ask our tax teamBrowse all sections

Section references are based on the Income Tax Act 2025 (Tax Year 2026-27). Examples are illustrative — verify with a Chartered Accountant before filing.