Advance Tax FY26
Instead of paying the entire income tax at the end of the financial year, taxpayers are required to pay it in installments under the advance tax system. If the estimated tax liability for the year, after deducting Tax Deducted at Source (TDS), is ₹10,000 or more, both individuals and businesses must pay advance tax.
How to Calculate Advance Tax
Estimate your income: Calculate your total expected income for the year, including salary, capital gains, business profits, rental income, and any other sources.
Compute tax liability: Apply the applicable income tax slab rates to your estimated income. Then, adjust for deductions and exemptions available under the Income Tax Act.
Deduct TDS: Subtract the amount of TDS already deducted (by your employer, bank, or other payer) from your total tax liability. The balance is the advance tax payable.
Penalties for Delay or Shortfall
If advance tax is not paid on time or is paid less than the required amount, interest under Sections 234B and 234C becomes applicable. Currently, interest is charged at 1% per month on the shortfall. Even if the delay is just a single day, penal interest is calculated for the entire quarter (three months).
