Advance Tax: The Four Deadlines Nobody Remembers

If your total tax liability for the year exceeds Rs. 10,000 and TDS does not cover it, section 208 mandates advance-tax payment in 4 instalments: 15 June, 15 September, 15 December, 15 March. Miss any, pay 1% per month interest under section 234C. Miss the full obligation, pay 1% per month from April 1 of the assessment year until filing under 234B. The interest stacks. A Rs. 1 lakh shortfall can cost Rs. 10,000 in compound 234 interest by the time you file.

By the end, you will know the 4-instalment schedule, the computation for each, the two income types that cause the biggest 234C surprises, and the senior-citizen exemption.

The four instalments. Cumulative, not standalone

15 June. 15% of estimated total tax for the year
15 September. 45% cumulative
15 December. 75% cumulative
15 March. 100% cumulative

Each instalment is CUMULATIVE: by 15 Dec you must have paid at least 75% of annual tax total, whether that comes from TDS, earlier advance-tax payments, or fresh payment. If TDS from your salary is running at 100% of your tax, no advance tax is needed. If you have FD/rent/capital-gains income outside salary, the gap needs top-up.

Why capital gains break the schedule

Section 234C proviso: capital gains and dividend earned AFTER an instalment date are assessed only from the next instalment onwards. Sold stocks on 20 December earning Rs. 5L LTCG? The 75%-cumulative target at 15 Dec ignores this gain (you had not earned it yet). But by 15 March the full tax on this gain needs to be paid. Miss 15 March, you pay 234C interest only on the March instalment shortfall, not the earlier ones. The proviso protects you from retroactive interest on the capital gain.

This is one reason December-quarter stock sales are favoured by tax-aware investors: they can defer advance-tax to March without 234C penalty on the earlier instalments. January-February sales compress the paying window; post-March 15 sales push into the next year entirely.

The 90% safe-harbour

Section 234B triggers only if your total tax PAID by 31 March < 90% of assessed tax. Pay 91% by March and you avoid 234B entirely. Only 234C (instalment-specific) applies. The safe-harbour is a buffer for estimation errors.

Who is exempt from advance-tax

Section 207(2) exempts resident seniors (60+) with no business/professional income from advance tax entirely. They pay at filing; no 234B/C interest. Section 44AD/44ADA presumptive filers pay in ONE instalment. Full 100% by 15 March (Budget 2016 simplification). Non-residents pay advance tax on India-source income at the same 4-instalment schedule as residents.

Presumptive scheme filers. One instalment only

Section 44AD (small business) and 44ADA (professionals) filers pay 100% of advance tax by 15 March. The single-instalment rule was Budget 2016 simplification. But first-time freelancers often miss it and pay 234C on earlier missed instalments by mistake. The rule is mandatory once you opt for presumptive.

Senior citizens without business income: no advance-tax

Section 207(2) exempts resident seniors (60+) with no business/professional income from advance tax. They settle at filing. If they have even a small consulting income, the exemption falls and regular advance-tax kicks in.

Salary TDS does not count as advance tax in the cumulative

TDS deducted from your salary counts toward the 100% total, but the timing is when the TDS was deducted (monthly). Not when it would be an "advance tax" instalment. If salary TDS covers your full liability, you are fine. If not (because of non-salary income), you top up via advance-tax.

Key Takeaways

15% / 45% / 75% / 100% on 15 June / Sept / Dec / March. Cumulative.
Presumptive filers: 100% by 15 March, single instalment.
Senior citizens without business income: exempt from advance tax entirely.
234C: 1%/month for instalment shortfall. 234B: 1%/month from 1 April if paid < 90%.
Capital gains booked mid-year can defer to next instalment under 234C proviso.