Advance tax deadline on March 15: Who must pay, penalty rules, and how to avoid interest charges
The rule applies to individuals, professionals, freelancers, and businesses whose total tax liability exceeds ₹10,000 after accounting for tax deducted at source (TDS) or tax collected at source (TCS). Missing the deadline can result in interest penalties under the Income Tax Act, making timely payment essential for proper tax compliance.
- Mar 11, 2026,
- Updated Mar 11, 2026 8:50 AM IST
Taxpayers are approaching a key deadline as the fourth and final instalment of advance tax for FY2025-26 must be paid by 15 March 2026. The requirement applies to individuals, professionals, freelancers, and businesses whose total tax liability exceeds ₹10,000 after adjusting for tax deducted at source (TDS) or tax collected at source (TCS). Missing the deadline can result in interest penalties under the Income Tax Act, making timely payment essential for proper tax compliance.
Advance tax is a system under which taxpayers pay tax on their estimated annual income in instalments during the financial year instead of making a lump-sum payment at the end. The mechanism helps distribute the tax burden evenly and ensures regular revenue flow to the government.
Who needs to pay advance tax
According to tax experts, advance tax applies to any taxpayer whose estimated tax liability after TDS/TCS exceeds ₹10,000 in a financial year. This includes salaried individuals with additional income, self-employed professionals, business owners, and freelancers.
CA Chandni Anandan, Tax Expert at ClearTax, said taxpayers should first calculate their total income for the year and then check the balance tax payable. “Every taxpayer whose estimated tax liability after deducting TDS or TCS exceeds ₹10,000 must pay advance tax in instalments. However, senior citizens without business or professional income are exempt from advance tax,” she said.
Taxpayers opting for presumptive taxation must generally pay 100% of their advance tax in a single instalment before 15 March.
What to do if income changes during the year
Experts say taxpayers must revise their calculations if they receive additional income during the year. “Income such as bonus, capital gains, dividends, gifts or interest must be included in the next instalment. If income arises after 15 March, the full tax on it should be paid before 31 March,” Anandan said.
For example, if a taxpayer earns capital gains during the year, the tax on that amount should be added to the remaining instalments. Failure to adjust may lead to interest charges later.
Common income sources often missed while calculating advance tax include interest income, rental income, capital gains, dividends, gifts, family pension, lottery winnings, and online gaming income.
How to pay advance tax
The Income Tax Department allows advance tax to be paid online through the e-filing portal using Challan ITNS-280. Taxpayers can select the ‘e-Pay Tax’ option, verify PAN details, choose the relevant assessment year, and select Advance Tax (100) as the payment type.
Companies and taxpayers whose accounts are subject to audit under Section 44AB are required to pay advance tax only through the online mode. The digital process is intended to make compliance easier and reduce errors.
Penalty for delay or short payment
Failure to pay advance tax on time attracts interest under Sections 234B and 234C of the Income Tax Act. A penalty of 1% per month or part of a month may be charged for delayed payment or for paying less than the required amount.
Interest under Section 234C applies to missed instalments, while Section 234B applies if less than 90% of total tax liability is paid by the end of the financial year.
With the 15 March 2026 deadline approaching, experts advise taxpayers to review their income carefully and pay any pending advance tax to avoid penalties and ensure smooth filing at the end of the financial year.
Taxpayers are approaching a key deadline as the fourth and final instalment of advance tax for FY2025-26 must be paid by 15 March 2026. The requirement applies to individuals, professionals, freelancers, and businesses whose total tax liability exceeds ₹10,000 after adjusting for tax deducted at source (TDS) or tax collected at source (TCS). Missing the deadline can result in interest penalties under the Income Tax Act, making timely payment essential for proper tax compliance.
Advance tax is a system under which taxpayers pay tax on their estimated annual income in instalments during the financial year instead of making a lump-sum payment at the end. The mechanism helps distribute the tax burden evenly and ensures regular revenue flow to the government.
Who needs to pay advance tax
According to tax experts, advance tax applies to any taxpayer whose estimated tax liability after TDS/TCS exceeds ₹10,000 in a financial year. This includes salaried individuals with additional income, self-employed professionals, business owners, and freelancers.
CA Chandni Anandan, Tax Expert at ClearTax, said taxpayers should first calculate their total income for the year and then check the balance tax payable. “Every taxpayer whose estimated tax liability after deducting TDS or TCS exceeds ₹10,000 must pay advance tax in instalments. However, senior citizens without business or professional income are exempt from advance tax,” she said.
Taxpayers opting for presumptive taxation must generally pay 100% of their advance tax in a single instalment before 15 March.
What to do if income changes during the year
Experts say taxpayers must revise their calculations if they receive additional income during the year. “Income such as bonus, capital gains, dividends, gifts or interest must be included in the next instalment. If income arises after 15 March, the full tax on it should be paid before 31 March,” Anandan said.
For example, if a taxpayer earns capital gains during the year, the tax on that amount should be added to the remaining instalments. Failure to adjust may lead to interest charges later.
Common income sources often missed while calculating advance tax include interest income, rental income, capital gains, dividends, gifts, family pension, lottery winnings, and online gaming income.
How to pay advance tax
The Income Tax Department allows advance tax to be paid online through the e-filing portal using Challan ITNS-280. Taxpayers can select the ‘e-Pay Tax’ option, verify PAN details, choose the relevant assessment year, and select Advance Tax (100) as the payment type.
Companies and taxpayers whose accounts are subject to audit under Section 44AB are required to pay advance tax only through the online mode. The digital process is intended to make compliance easier and reduce errors.
Penalty for delay or short payment
Failure to pay advance tax on time attracts interest under Sections 234B and 234C of the Income Tax Act. A penalty of 1% per month or part of a month may be charged for delayed payment or for paying less than the required amount.
Interest under Section 234C applies to missed instalments, while Section 234B applies if less than 90% of total tax liability is paid by the end of the financial year.
With the 15 March 2026 deadline approaching, experts advise taxpayers to review their income carefully and pay any pending advance tax to avoid penalties and ensure smooth filing at the end of the financial year.