Advance Tax in India: The Complete FY 2025-26 Playbook — Beacon Filing

1 Advance tax in 60 seconds

Advance tax (a.k.a. “pay-as-you-earn”) is income tax paid in quarterly instalments instead of a single year-end bill. Section 208 of the Income-tax Act requires anyone whose total tax liability after TDS will exceed ₹10,000 in a financial year to pay it. Miss an instalment and you invite automatic interest under Sections 234B and 234C.

2 Who must pay?

• Salaried individuals with significant income that isn’t fully covered by employer TDS—e.g. capital gains, ESOP perquisites, crypto profits.

• Self-employed professionals and freelancers once net tax due tops ₹10,000.

• Businesses operating as proprietorships, partnerships, LLPs or companies.

• NRIs earning Indian-source income, subject to the same thresholds.

• Senior citizens (60 +) who have no business income are exempt; otherwise they pay like everyone else.

3 FY 2025-26 Instalment calendar

Companies following a 30 June year-end still use the same advance-tax calendar; the Act recognises only the Indian fiscal year.

4 How to compute your instalment quickly

1. Forecast annual income: salary (CTC minus exemptions), business profit, capital gains, interest, rental, dividend, crypto, etc.

2. Apply the correct slab or section 115BAA/BAE/115BAB rate for companies.

3. Subtract all eligible deductions/ rebates (80C, 80D, Section 10 exemptions, MAT credit, etc.).

4. Reduce TDS/TCS already deducted or likely to be deducted.

5. Apply surcharge and 4 % health-&-education cess.

6. Pay the percentage due as per the instalment calendar.

Beacon Filing’s Advance-Tax Calculator plugs into your books, imports TDS data from the TRACES portal and suggests the nearest-rupee payment within 30 seconds.

5 Interest for short-payment or non-payment

Tip: Paying the full deficit by 31 March avoids 234B entirely; only 234C will apply.

6 Modes of payment

• Online through NSDL-Tax Payment Portal → Challan 280 → select “0021 Income-tax (Other than Companies)” or “0020” for companies.

• Net-banking / Debit-card / UPI with 30+ authorised banks.

• Over-the-counter at designated bank branches (use physical Challan 280).

Always download the BSR code, challan number and CIN—they must match the pre-filled data when filing your ITR.

7 Common pitfalls (and how Beacon Filing prevents them)

• Crypto profit swings: we re-forecast instalments using real-time price feeds.

• Multiple 26AS entries for the same TDS: our reconciliation engine nets duplicates before tax is computed.

• Foreign remittances counted twice: FEMA desk matches Swift MT103 data with your ledger, preventing over-statement.

• Mis-classification of speculative vs non-speculative income: senior CA reviews every ledger flag.

8 FAQs in 30 words each

Q: Do I still pay advance tax if I opt for the presumptive scheme (44AD/44ADA)?
A: Yes, but you can pay the entire tax by 15 March in one go.

Q: What if I overpay?
A: You claim a refund when filing your ITR; the CPC auto-adds 6 % p.a. interest.

Q: Are capital-gain estimates accepted?
A: Yes—compute reasonably; if actual gains differ, adjust in the March instalment or pay 234C interest on the shortfall.

9 How Beacon Filing makes advance tax painless

• One-click calculator pulls books + TDS data and auto-generates Challan 280.

• Push notifications 7, 3 and 1 days before each deadline.

• In-house CA review on every computation ≥ ₹50 lakh to de-risk penalties.

• Quarterly health check compares projections with actuals, recalibrating instalments.

Ready to banish advance-tax anxiety?
Book a 15-minute call and let Beacon Filing file, reconcile and remind—so you never lose sleep over Section 234B/C interest again.

Disclaimer (23 July 2025): Tax laws evolve. This guide offers general information—always obtain personalised professional advice before acting.