If you haven't paid the final installment of your advance tax yet, take heed. The deadline for depositing the fourth and final installment of advance tax for the financial year 2025-26 is March 15, 2026.

If the tax is not deposited by this date, the Income Tax Department may levy interest and penalties.

What is the Advance Tax System?
In India, the advance tax system is a mechanism wherein taxpayers pay their taxes in installments throughout the financial year. In other words, instead of paying the entire tax liability as a lump sum while filing their Income Tax Return, taxpayers pay tax during the year based on their estimated income.

Taxpayers are required to estimate their projected income at the beginning of the financial year to determine their tax liability. Subsequently, the advance tax is deposited in four distinct installments.

Who is Required to Pay Advance Tax?
If an individual's total tax liability amounts to ₹10,000 or more—and this amount remains outstanding even after accounting for TDS (Tax Deducted at Source), TCS (Tax Collected at Source), or other tax credits—then paying advance tax becomes mandatory.

The following individuals, in particular, are required to pay advance tax:

Freelancers and Consultants – Those who earn fees by providing independent services.
Individuals with Rental Income – Those whose earnings include a portion derived from property rentals.
Individuals Earning Capital Gains – Those who generate profits from selling shares, mutual funds, or property.
Individuals with Interest Income – Those who earn interest from Fixed Deposits or other investments.
Salaried Employees with Additional Income – Such as income derived from share trading, cryptocurrency, or rentals.

However, senior citizens aged 60 years or older who do not have any income from business or a profession are exempt from paying advance tax. Note, however, that this exemption does not apply to Non-Resident Indians (NRIs).

What Happens if You Miss the Deadline?
If a taxpayer fails to deposit their advance tax by March 15—or deposits an amount lower than the prescribed liability—interest may be levied under Sections 234B and 234C of the Income Tax Act. In this scenario, interest may be payable on the outstanding tax at a rate of 1% per month.

Furthermore, if less than 90% of the total tax liability is deposited by March 15, interest will continue to accrue on the remaining amount until the entire tax liability is cleared.

Complete Schedule for Advance Tax
According to the rules of the Income Tax Department, advance tax is deposited in four installments:

June 15 – 15% of the total tax
September 15 – 45% of the total tax
December 15 – 75% of the total tax
March 15 – 100% of the total tax

In other words, it is mandatory to clear the entire tax liability by March 15. If you are a freelancer, earn income from investments, or have additional sources of income, it is essential to deposit your advance tax on time; otherwise, the burden of interest may increase.

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