According to Kinjal Bhutta, Treasurer at the Bombay Chartered Accountants Society (BCAS), advance tax is not limited to businesses and professionals and can also apply to salaried individuals in certain situations.
Here’s a look at who needs to pay advance tax and what to keep in mind before the deadline.
Who needs to pay advance tax?
Advance tax becomes applicable when a taxpayer’s total tax liability exceeds ₹10,000 in a financial year and the tax is not fully covered by TDS.
“Salaried individuals may also be liable to pay advance tax if their total tax liability exceeds ₹10,000 and the tax is not fully covered by TDS,” Bhutta said.
This typically happens when individuals earn additional income such as:
- Capital gains from stocks or mutual funds
- Rental income
- Interest income from deposits or other sources
- In such cases, taxpayers must estimate their tax liability and pay the amount through advance tax instalments.
Why the March 15 instalment is crucial
The March 15 deadline is particularly important for freelancers and professionals, as they are expected to pay almost the entire advance tax for the financial year by this date.
“For those opting for presumptive taxation, the other advance tax instalments are relaxed and one has to pay only in the last instalment i.e. 15th March,” Bhutta said.
She also noted that the TDS threshold under Section 194J for professionals has been increased from ₹30,000 to ₹50,000 from April 1, 2025.
This means TDS may not be deducted in several cases, increasing the responsibility for professionals to calculate and pay advance tax themselves.
Old vs new tax regime: What taxpayers should consider
Taxpayers should compare both tax regimes before deciding which one to opt for.
Bhutta said individuals who claim deductions such as:
- Housing loan interest
- House Rent Allowance (HRA)
- Tax-saving investments
- may find the old tax regime more beneficial.
Those with fewer deductions may benefit from the lower tax rates available under the new tax regime.
“A comparative calculation based on the individual’s income profile is advisable before making the choice,” she said.
Are senior citizens required to pay advance tax?
Senior citizens without income from business or profession are not required to pay advance tax.
This exemption applies even if they earn income from:
- Bank interest
- Fixed deposits
- Dividends
“In such cases, the tax liability can be discharged at the time of filing the income tax return, if necessary,” Bhutta said.
What happens if you miss the deadline?
Missing an advance tax instalment does not attract a penalty, but it can lead to interest charges.
“If the required advance tax is not paid within the prescribed instalments, interest may be charged under Sections 234B and 234C of the Income-tax Act,” Bhutta said.
To avoid this, taxpayers should review their income and tax liability before the end of the financial year.
Precautions before paying the last instalment
Before making the payment, taxpayers should review all sources of income that may not be subject to TDS.
Bhutta advised checking:
- Interest income
- Capital gains
- Freelance or professional receipts
Taxpayers should also verify details in Form 26AS and the Annual Information Statement (AIS) and ensure the correct assessment year and payment type are selected while paying the challan.
Can advance tax be paid on Sunday?
Since March 15 falls on a Sunday this year, taxpayers may still make payments online.
“Advance tax payments are made electronically through the income tax portal, which is available round the clock. Therefore, taxpayers can make advance tax payments even on Sundays or public holidays,” Bhutta said.
If online payment is not possible, taxpayers can generate a challan and make an offline payment at a bank branch, which must be completed within 15 days of challan generation or by March 31, whichever is earlier.