If your tax for the year exceeds ₹10,000, the law expects you to pay it in instalments through the year — not at filing. Miss the schedule and interest under 234B and 234C quietly adds up. Here's the schedule and how to minimise the damage.
CA Rahul Dang
Founder & Practice Lead
Most people think of income tax as something you settle once a year, at filing. The law sees it differently: if your total tax liability for the year is ₹10,000 or more (after TDS), you're expected to pay it in instalments as you earn — that's advance tax. Miss the rhythm and you pay interest under Sections 234B and 234C. Here's how it works and how to keep that interest near zero.
You're liable for advance tax if your estimated tax for the year, after reducing TDS, is ₹10,000 or more. This commonly catches people with capital gains, rental income, interest income, freelance or business income, or salaried individuals with large additional income that TDS didn't fully cover.
Senior citizens (60+) who have no income from business or profession are exempt from paying advance tax — they can pay at filing without 234B/234C.
For most taxpayers, advance tax is due in four instalments across the financial year:
Taxpayers under the presumptive scheme (Section 44AD / 44ADA) get a simpler deal: they pay the entire advance tax in one shot by 15 March.
Section 234C — deferment interest. If you miss or underpay any instalment, you pay 1% per month on the shortfall, for the period of the delay. It's the penalty for not keeping pace through the year.
Section 234B — default interest. If you pay less than 90% of your total tax as advance tax by the end of the financial year, you pay 1% per month on the shortfall from 1 April until you finally pay. This is the one that compounds if you leave everything to filing.
Together, these can add a meaningful amount to a large liability — and they're entirely avoidable with a little forward planning.
Who has to pay advance tax? Anyone whose tax for the year, after TDS, is ₹10,000 or more. Senior citizens without business income are exempt.
What are the advance tax due dates? 15 June (15%), 15 September (45%), 15 December (75%) and 15 March (100%) for most taxpayers; presumptive taxpayers pay 100% by 15 March.
What's the difference between 234B and 234C? 234C is for missing/underpaying instalments through the year; 234B is for paying less than 90% of total tax by year-end. Both run at 1% per month.
How is advance tax on capital gains handled? Since gains can't be foreseen, advance tax on a capital gain is due from the instalment falling after the gain arises — pay it in the next due instalment.
Advance tax isn't an extra tax — it's the same tax, on a schedule. Keeping pace through the year, especially after a capital gain or a big interest payout, is the difference between zero interest and a needless 234B/234C bill.
Let RDA plan your advance tax — we estimate your liability, time your instalments around capital gains, and keep your 234B/234C interest at zero.
Written by CA Rahul Dang, Founder & Practice Lead, RDA Tax Advisory Services Pvt Ltd, Baner, Pune.
Part of the Income Tax knowledge hub.
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