Calculate quarterly advance tax instalments
Most salaried people never have to think about advance tax โ their employer handles it through TDS. But the moment you start earning from freelancing, rental income, capital gains, or FD interest, the situation changes. If your total tax liability after TDS crosses โน10,000, you're required to pay advance tax in quarterly instalments during the year itself. Miss it, and Section 234B and 234C interest kicks in.
Any individual, freelancer, business owner, or investor whose estimated tax liability (after TDS) exceeds โน10,000 in a financial year. Senior citizens (60+) who don't have business income are exempt โ they pay all their tax at filing time.
Section 234C charges 1% per month on the shortfall from the due date to the date of actual payment. Section 234B charges 1% per month if less than 90% of total tax was paid by March 31 through advance tax. These penalties are entirely avoidable.
Pay through Challan 280 on incometax.gov.in โ select "Advance Tax" as the payment type and pay via net banking or UPI. Keep the challan for your ITR filing. Your complete annual tax picture is best seen through our income tax calculator โ run that alongside this calculator for the full view.
The excess gets refunded when you file your ITR. The Income Tax Department credits the overpaid amount to your bank account after processing, usually within 2โ6 months. There's no penalty for overpaying โ only for underpaying.
Yes. Capital gains count toward your advance tax liability. Gains earned before September 15 should be included in that instalment. Most people include capital gains in the December or March instalment if they happen later in the year.
Paying by March 15 avoids Section 234C. But Section 234B may still apply if less than 90% of total tax was paid by March 31. The quarterly schedule is designed to spread the payment and avoid interest altogether.
Yes. Freelancers whose tax liability after TDS (on professional fee deductions) exceeds โน10,000 must pay advance tax. The practical approach: estimate annual income conservatively, calculate approximate tax, and pay in four instalments. If income ends up higher, pay extra in December or March.