Advance Tax Final Deadline Looms: Pay by March 15 to Avoid Penalties – Key Details You Need to Know
New Delhi: The clock is ticking for taxpayers across India as today, March 15, 2025, marks the deadline for the final installment of advance tax for the financial year 2024-25 (FY24-25). The Income Tax Department has reminded taxpayers that failing to meet this deadline could lead to penalties and interest charges. With the current date being March 15, 2025, this is the last chance to settle your full advance tax liability for the year without incurring additional costs.
Under the provisions of the Income-Tax (I-T) Act, 1961, advance tax is mandatory for individuals, Hindu Undivided Families (HUFs), businesses, and professionals whose estimated tax liability for the financial year exceeds Rs 10,000. This system ensures that tax is paid as income is earned, rather than in a lump sum at the end of the year, easing the burden on taxpayers and helping the government maintain a steady cash flow.
This requirement isn’t limited to self-employed individuals or business owners—it applies even to salaried employees. While employers deduct tax at source (TDS) from salaries, this often covers only salary income. Additional earnings—such as capital gains from stock or property sales, interest from savings accounts or fixed deposits, rental income, or even freelance work—are typically not accounted for in TDS. As a result, salaried taxpayers must calculate and pay advance tax on these extra income sources to stay compliant.
Who Is Exempt from Advance Tax?
Not everyone needs to worry about advance tax. Senior citizens (aged 60 or above) who do not have income from a business or profession are exempt from this obligation. This exemption recognizes that many retirees rely on fixed income sources like pensions or interest, which may already be subject to TDS, and aims to simplify their tax responsibilities. However, senior citizens running businesses or earning professional income (e.g., consulting fees) are not exempt and must follow the same rules as others.
For everyone else—salaried employees, freelancers, investors, landlords, and business owners—advance tax is calculated based on the total income earned during FY24-25. The final installment, due today, ensures that 100% of the estimated tax liability is paid by March 15.
Advance Tax Payment Schedule: A Breakdown
Advance tax is paid in four installments throughout the financial year, designed to align with income generation and tax planning:
- June 15: At least 15% of the estimated tax liability must be paid. This early payment is based on income projections for the year.
- September 15: A cumulative 45% of the total tax due should be settled, adjusting for any changes in income since June.
- December 15: By this date, 75% of the tax liability must be paid, reflecting income earned up to the third quarter.
- March 15: The full 100% of the estimated tax liability is due, covering all income for FY24-25.
For example, if your estimated tax liability for the year is Rs 50,000, you’d need to pay Rs 7,500 by June 15, Rs 22,500 by September 15, Rs 37,500 by December 15, and Rs 50,000 by March 15. These percentages are cumulative, so payments made earlier in the year count toward the later deadlines.
Salaried individuals often assume TDS covers their tax obligations, but this can lead to underpayment if they have other income. For instance, if you sold shares and made a Rs 2 lakh capital gain, or earned Rs 50,000 in interest from a fixed deposit, your employer’s TDS won’t reflect these amounts. Taxpayers must estimate their total income from all sources and pay advance tax accordingly.
How to Pay Advance Tax: Step-by-Step
Making your payment is straightforward through the Income Tax Department’s official website (www.incometax.gov.in). Here’s how:
- Log In: Use your Permanent Account Number (PAN) to access the e-filing portal.
- Select Payment Option: Navigate to the ‘e-pay tax’ section.
- Choose Advance Tax: Select ‘Advance Tax (100)’ as the payment type.
- Pick the Assessment Year: For FY24-25, choose the assessment year 2025-26 (the year in which taxes will be assessed).
- Complete Payment: Enter the amount, choose your payment method (net banking, debit card, etc.), and submit.
The portal generates a challan receipt upon successful payment, which you should save for your records. If you’re unsure about your liability, tools like the Advance Tax Calculator on the I-T website can help estimate it based on your income and deductions.
Missing the Deadline: Penalties and Interest
If you miss today’s March 15 deadline, you’re not entirely out of luck—you can still pay by March 31, 2025, the end of the financial year. However, late payments come with a cost. Under Section 234C of the I-T Act, interest is charged at 1% per month on any shortfall in advance tax for each installment period.
Here’s how it works:
- If you paid less than 12% of your total tax by June 15, 36% by September 15, 75% by December 15, or 100% by March 15, interest applies to the shortfall.
- For the March 15 deadline, missing the full payment triggers a 1% interest charge for one month (March 15 to March 31). For example, if you owe Rs 20,000 and pay nothing by today, you’ll owe Rs 20,200 by March 31 (Rs 20,000 + 1% of Rs 20,000).
This penalty is in addition to potential interest under Section 234B (for underpayment of total tax) or Section 234A (for late filing of returns), which could apply later if the shortfall persists. The goal is to encourage timely compliance, so paying today avoids these cascading charges.
Why It Matters
Advance tax isn’t just a legal obligation—it’s a practical way to manage your finances. By spreading payments over the year, you avoid the stress of a large tax bill during return filing season (typically July). It also ensures the government has funds to operate public services year-round.
With today being March 15, 2025, taxpayers are urged to act immediately. Review your income, calculate your liability, and make your payment to stay penalty-free. For assistance, consult a tax professional or visit the Income Tax Department’s website for FAQs and support. Don’t wait—the cost of delay is more than just financial; it’s peace of mind.