Taxpayers are reminded that the third installment of advance tax for the financial year 2025-26 must be paid by 15 december 2025. Missing this deadline can lead to interest and penalties under the Income Tax Act, making timely payment crucial for all eligible taxpayers.
What is Advance Tax?
Advance tax, also called pay-as-you-earn tax, is the tax that taxpayers must pay in installments during the financial year instead of waiting until the end of the year. It is applicable to:
· Salaried individuals with additional income (e.g., interest, rent, capital gains)
· Self-employed professionals and business owners
· Individuals liable to pay tax beyond TDS deductions
Paying advance tax on time helps avoid interest charges and penalties.
Advance Tax Installment Schedule
For the financial year 2025-26, the schedule is generally:
Installment
Due Date
Percentage of Estimated Tax
1st
15 june 2025
15%
2nd
15 september 2025
45%
3rd
15 december 2025
75%
4th
15 march 2026
100%
The third installment of 75% must be paid by 15 december 2025.
Penalties for Late Payment
1. Interest Under Section 234B:
o Applicable if you fail to pay advance tax or pay insufficiently.
o Charged at 1% per month on the unpaid tax until the date of payment.
2. Interest Under Section 234C:
o Charged for delayed installment payments.
o Interest is calculated on shortfall in installment from the due date.
3. Additional Penalty:
o Delayed payment may also invite penalty under sections 271 and 272 in extreme cases.
How to Pay Advance Tax
Step 1: Calculate your total tax liability for the financial year.
Step 2: Deduct any TDS/TCS already paid.
Step 3: Visit the Income Tax Department website https://www.incometax.gov.in or use authorized bank challans.
Step 4: Select Advance Tax as the payment type and complete the transaction.
Step 5: Save the challan receipt for records.
Tips to Avoid Interest and Penalties
· Calculate accurately: Ensure estimated tax is correct to avoid underpayment.
· Pay early: Don’t wait until the last day; payment may take time to reflect in records.
· Keep documentation: Maintain receipts, proofs, and calculations for verification.
· Seek professional help: Consult a CA or tax advisor if unsure about computations.
Conclusion
The advance tax deadline of 15 december 2025 is approaching fast. Paying on time not only ensures compliance with the law but also helps avoid extra interest and penalties under sections 234B and 234C. Taxpayers should act promptly, calculate their liability accurately, and complete the payment before the due date to stay clear of unnecessary financial burdens.
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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