How Advance Tax Works (And Who Actually Needs to Pay It)

Who this actually applies to

If your net tax liability for the year - after subtracting TDS already deducted - is estimated to exceed ₹10,000, you're required to pay advance tax in instalments through the year rather than settling it all at filing time. This typically catches freelancers, consultants, and anyone with significant income beyond a single TDS-covered salary (rental income, capital gains, interest income) - salaried employees whose entire tax liability is already covered by employer TDS often have nothing extra to pay.

The instalment schedule

For FY 2026-27, cumulative advance tax is due as follows: 15% by 15 June, 45% by 15 September, 75% by 15 December, and 100% by 15 March. Taxpayers under the presumptive taxation schemes (44AD/44ADA) get a simpler path - the full amount can be paid in one instalment by 15 March.

Who's exempt

Senior citizens (60 and above) with no business or professional income are exempt from advance tax entirely, even if their overall tax liability exceeds ₹10,000 - a specific carve-out for retirees living on pension, interest, and investment income.

What happens if you miss an instalment

Shortfall or delay attracts interest (commonly around 1% per month on the unpaid amount) - a real, avoidable cost for income that was reasonably predictable, like known rental income or a freelance retainer.

(Threshold, instalment percentages, and exemption rules checked as of September 2026, FY 2026-27.)

The practical takeaway

If you have income beyond a single TDS-covered salary - freelance work, rent, significant capital gains - estimate your likely tax liability early in the year rather than being surprised by an interest charge for instalments you didn't realize applied to you.