The third installment of Advance Tax for the Financial Year 2025-26 is fast approaching. Taxpayers liable to pay advance tax must deposit 75% of their estimated annual tax by december 15, 2025. Missing this deadline can result in interest penalties under the Income Tax Act.
1. Who Needs to Pay Advance Tax?
Advance Tax is applicable for:
· Salaried individuals with additional income (rent, capital gains, business income, etc.)
· Self-employed professionals and business owners
· Investors with capital gains, dividends, or interest income exceeding ₹10,000 annually
· Others liable under Income Tax provisions
2. Installment Schedule for Advance Tax (FY 2025-26)
Installment
Due Date
Percentage of Estimated Tax
1st
15th june 2025
15%
2nd
15th september 2025
45%
3rd
15th december 2025
75%
4th
15th march 2026
100%
Note: The 75% figure is cumulative, meaning by december 15, you should have paid 75% of your total estimated tax for the year.
3. Penalty and Interest Rules
· Section 234B: Interest for non-payment or short payment of advance tax.
· Section 234C: Interest for deferred payment of installment beyond due dates.
· Rate: Calculated on the shortfall amount at a rate prescribed by the Income Tax Department (usually 1% per month or part thereof).
Example:
· Estimated tax for FY 2025-26: ₹2,00,000
· Advance tax paid till 2nd installment: ₹90,000
· By Dec 15, 2025, you should have paid ₹1,50,000 (75%)
· Shortfall: ₹60,000 → Interest charged under Sections 234B/234C
4. How to Pay Advance Tax
1. Online via Net banking / Income Tax Portal:
o Log in to https://www.incometax.gov.in
o Select “e-Payment of Taxes” → Advance Tax
2. Offline via bank Challan:
o Visit authorized banks with Challan 280
o Fill in PAN, assessment year, and amount
o Submit and keep acknowledgment receipt
5. Important Tips
· Estimate your annual tax liability carefully, including all sources of income.
· Pay on or before december 15, 2025, to avoid interest charges.
· Maintain proof of payment for income tax filing.
· Use tax calculators provided by the IT Department for accuracy.
Conclusion:
The third installment of Advance Tax is due December 15, 2025. Taxpayers must ensure timely payment to avoid interest penalties under Sections 234B and 234C. Proper planning and timely payment can save money and prevent legal complications.
Disclaimer:
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk..jpg)
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