Advance tax due dates and penalty — what happens if I miss one?

Advance tax is payable in four instalments — 15 June, 15 September, 15 December and 15 March — reaching 15%, 45%, 75% and 100% of your liability cumulatively. It applies if your tax after TDS exceeds ₹10,000 for the year. Shortfalls attract 1% a month under Section 234C, and under 234B if less than 90% is paid by year end.

The four dates and the cumulative percentages

The percentages are cumulative, not per-instalment, which is the detail most people get wrong. By 15 June you should have paid 15% of your estimated annual liability; by 15 September, 45% in total; by 15 December, 75%; and by 15 March, the full 100%. So the September instalment is 30% of the year, not 45%.

Advance tax applies when your total tax liability for the year, after subtracting TDS already deducted, exceeds ₹10,000. Most purely salaried people never deal with it, because employer TDS covers the liability. It starts to matter when you have income TDS does not fully cover — interest income, rent, capital gains, freelance or consulting receipts, or a second employer mid-year.

What the interest actually costs

Section 234C charges 1% a month for a shortfall against an instalment, generally for three months for each of the first three instalments and one month for the last. Section 234B charges 1% a month from the start of the assessment year until you pay, if you have paid less than 90% of your assessed liability by the end of the financial year. The two can apply together.

One percent a month is 12% a year, simple. That is not a fine so much as an expensive way to borrow from the tax department, and unlike a penalty it accrues quietly rather than arriving as a notice.

The traps worth knowing

Capital gains are the classic one: you cannot forecast a gain you have not made, so the rules relax the earlier instalments for gains that arise later in the year — but you are expected to pay in the instalment following the gain, not at year end. Dividend income has a similar carve-out.

The other trap is the 15 March deadline. It is the final instalment for the year, and it is not the same as the filing deadline months later. Paying everything at filing time means 234B interest has been running throughout.

Staying ahead of it

The practical approach is to re-estimate your liability once a quarter rather than once a year, since the instalments are based on an estimate you are allowed to revise. Muktify's financial-calendar reminders cover these four dates along with the other fixed points of the Indian money year, so the date arrives before the interest does.

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