Advance Tax Schedule and Section 234B/234C Interest — FY 2025-26 Guide
Last verified: April 2026, against Sections 208, 234A, 234B, 234C of the Income Tax Act and CBDT clarifications on advance tax computation.
If your total tax liability for the year — after TDS — exceeds ₹10,000, you must pay advance tax in four instalments. Miss an instalment and Section 234C interest kicks in at 1% per month for the shortfall. Pay less than 90% of total liability by 31 March and Section 234B adds another 1% per month from 1 April till you actually pay. Most salaried Indians don’t realise this matters to them — but it does the moment you have meaningful capital gains, rental income, or business income outside salary TDS.
Who must pay advance tax
Anyone whose total tax liability for the FY (after deducting TDS) is more than ₹10,000. This includes:
- Salaried with significant capital gains (mutual fund redemption, equity sale)
- Rental income earners (typically TDS at 5% under 194-IB doesn’t fully cover slab tax)
- Freelancers and consultants
- Business owners
- Senior citizens with FD interest above their slab-covering TDS
Exception: Resident senior citizens (60+) with no business income are exempt from advance tax — they pay only at year-end via self-assessment.
Advance tax due dates — FY 2025-26
| Instalment | Due date | Cumulative tax to be paid |
|---|---|---|
| 1st | 15 June 2025 | 15% of total tax |
| 2nd | 15 September 2025 | 45% of total tax |
| 3rd | 15 December 2025 | 75% of total tax |
| 4th | 15 March 2026 | 100% of total tax |
Section 44AD/44ADA presumptive taxpayers can pay 100% by 15 March in a single shot — no quarterly schedule.
How to compute advance tax
- Estimate your total income for the year (salary + capital gains + rental + interest + business)
- Apply slab rates and deductions
- Compute total tax + 4% cess
- Subtract TDS already deducted (or expected to be deducted by year-end)
- Result = your advance tax liability
- Pay in 4 instalments per the schedule above
Worked example — salaried with capital gains
Salaried at ₹15 L (TDS ₹85K under new regime). Sells equity in May 2025 with ₹3 L LTCG (₹1.75 L taxable above ₹1.25 L exemption). Sells more equity in October 2025 with ₹2 L STCG.
Expected tax for the year:
- Salary tax (after standard deduction, 87A rebate considered): ₹85K (covered by TDS)
- LTCG tax: ₹1.75 L × 12.5% = ₹21,875
- STCG tax: ₹2 L × 20% = ₹40,000
- 4% cess: ₹2,475
- Total non-TDS tax: ₹64,350
Advance tax schedule:
| Date | Cumulative payable | Action |
|---|---|---|
| 15 June 2025 | 15% × ₹64,350 = ₹9,653 | Pay ₹9,653 (LTCG already realised; should pay) |
| 15 Sep 2025 | 45% × ₹64,350 = ₹28,958 | Pay additional ₹19,305 |
| 15 Dec 2025 | 75% × ₹64,350 = ₹48,263 | Pay additional ₹19,305 (STCG of Oct already realised) |
| 15 Mar 2026 | 100% × ₹64,350 = ₹64,350 | Pay additional ₹16,087 |
Section 234C — interest for shortfall in instalment
Charged @ 1% per month (or part thereof) on the shortfall, for 3 months for each of the first 3 instalments and 1 month for the last instalment.
If you missed paying 15% by 15 June: 1% × 3 months × shortfall amount.
If you missed 45% by 15 Sep: 1% × 3 months × shortfall to 45%.
And so on. Even small shortfalls compound across all four instalments.
Example of 234C interest
Total advance tax: ₹64,350. You paid only ₹5,000 on 15 June. Shortfall to 15% = ₹9,653 − ₹5,000 = ₹4,653. Interest = 1% × 3 months × ₹4,653 = ₹140.
Multiply this across all four instalments and a typical shortfall pattern → ₹500-2,000 of unnecessary 234C interest. Annoying, not catastrophic.
Section 234B — interest for under-payment of total advance tax
Charged @ 1% per month on shortfall if you’ve paid less than 90% of total tax liability by 31 March. Calculated from 1 April till the date you actually pay (typically when you file ITR with self-assessment tax).
Practical impact: Filing on 31 July with shortfall = 4 months of 234B interest. Filing on 31 December = 9 months.
Example of 234B interest
Total tax: ₹64,350. You paid ₹40,000 in advance tax + ₹0 till you file on 31 July. Shortfall = ₹24,350 (38% paid, less than 90%). 234B interest = 1% × 4 months × ₹24,350 = ₹974.
How to pay advance tax
- Go to incometax.gov.in → e-Pay Tax
- Select Challan 280 (Income Tax other than Companies)
- Type of Payment: 100 – Advance Tax
- Assessment Year: AY 2026-27 (for FY 2025-26 advance tax)
- Enter PAN, name, address, amount
- Choose payment method: net banking, debit card, NEFT/RTGS
- Pay; download the challan with BSR code and serial number — needed at ITR filing
Common mistakes
- Paying advance tax in AY 2025-26 instead of AY 2026-27. AY 2026-27 = FY 2025-26. Wrong AY routes the payment to the wrong year.
- Treating bank FD interest as auto-covered by TDS. Bank TDS at 10% rarely covers slab-rate liability for senior citizens or 30% slab earners. Compute separately.
- Ignoring December 15 deadline. Many people pay full advance tax in March, triggering 234C interest on the missed Q1/Q2/Q3 instalments.
- Forgetting capital gains realised in March. If you sold equity on 25 March 2026, the CG tax is due by 15 March — you’ve already missed it. Section 234C provides marginal relief for tax on income earned in the last quarter, but you’ll still pay self-assessment tax + 234A interest till you file.
Linked deep-dives
- How to file ITR online
- Capital gains tax — when advance tax matters
- ITR form selection
- Old vs New Tax Regime
- Income Tax Calculator
FAQs
Is advance tax mandatory for salaried employees?
Only if your total tax liability after TDS exceeds ₹10,000. Plain salary with no other income usually has TDS that fully covers liability — no advance tax needed. Salary + capital gains is the most common trigger.
What if my income estimate changes mid-year?
You can adjust the next instalment to make up. Cumulative payment to each due date matters, not historical payment.
Is there interest on advance tax paid in excess?
Section 244A — yes. The IT Department pays 0.5% per month on excess advance tax, computed from filing date till refund issued. Interest is taxable as “income from other sources.”
What’s the difference between 234A, 234B, 234C?
234A: interest on late filing of ITR. 234B: interest on under-payment of total advance tax (less than 90%). 234C: interest on shortfall in any individual instalment. All three at 1% per month.
Can I claim a deduction on advance tax interest paid?
No. Interest under 234A/B/C is paid on under-payment of self-tax — it’s not a business expense and not deductible.
If I pay advance tax for capital gains in Q1 but realise more gains in Q4, what happens?
You should top up Q4 (15 March) to cover the additional gains. Section 234C provides relief if the additional income arose in the final quarter — interest is computed only on the instalment shortfall up to 15 March, not retrospectively.
Sources & references
- Sections 208, 234A, 234B, 234C of the Income Tax Act
- CBDT Circular on advance tax computation for capital gains
- Income Tax Department — Challan 280 and AY allocation rules
Last verified: April 2026. Advance tax due dates and interest rates are stable; we re-verify each Budget cycle.
