Income tax is pay-as-you-earn. If your tax liability for the year exceeds the prescribed limit after TDS, you are supposed to pay it in instalments through the year — not in one gulp at filing time.
The instalment rhythm
Advance tax is paid in quarterly instalments on notified dates through the financial year, with cumulative percentages due at each date. Presumptive scheme taxpayers enjoy a simplified single-instalment rule as per current provisions.
What skipping it costs
Interest is charged for shortfall and for deferment of instalments — computed automatically when you file. It is not a penalty you can argue with; it is arithmetic.
Doing it well
- Estimate income quarterly, not annually — revise instalments as the year unfolds
- Count TDS already deducted before computing what to pay
- Big one-off gains (property, shares) trigger advance tax in the same year — plan the instalment when the gain happens
Our tax planning service includes quarterly advance tax workings — no surprises in July. Talk to us.
