Advance tax deadline today | Here’s how much interest applies if you miss the payment

If you earn income beyond a fixed salary or have multiple sources of income, the advance tax deadline today — Monday, December 15, 2025 — is one you should not overlook. Missing or underpaying advance tax can attract interest liabilities that accumulate quietly over time. Since the Income Tax Act follows a strict “pay as you earn” principle, understanding how advance tax works — and the cost of delays — can help taxpayers avoid penalties and last-minute stress.

Here is a simple breakdown of what advance tax is, who needs to pay it, key due dates, and how interest is calculated in case of late or short payment.

What is advance tax?

Advance tax requires an assessee to estimate their total income for the financial year and pay tax on that estimated income in instalments during the year itself, if the tax liability exceeds a prescribed threshold.

In effect, taxpayers are required to pay tax as they earn income, rather than settling the entire liability at the end of the year. This is why advance tax is commonly referred to as the “Pay As You Earn” scheme.

Who needs to pay advance tax?

According to Abhishek Soni, CEO and Co-founder of Tax2win, “Anyone whose total tax liability for the year is ₹10,000 or more after TDS must pay advance tax. This includes salaried individuals with additional income, freelancers, professionals and businesses.”

This means even salaried taxpayers may need to pay advance tax if they earn income from sources such as interest, capital gains, rent, freelancing or consulting work.

When is the advance tax payment deadline?

The deadline for paying the third instalment of advance tax for Assessment Year 2026–27 is December 15, 2025.

Advance tax can be paid either online or offline by submitting details through Challan No. ITNS 280. However, companies and individuals whose accounts are required to be audited under Section 44AB of the Income Tax Act must pay advance tax only through online mode.

What are the due dates for payment of advance tax?

Advance tax is paid in four instalments during the financial year:

• First instalment: On or before June 15 — at least 15% of advance tax

• Second instalment: On or before September 15 — at least 45% of advance tax, after adjusting earlier payments

• Third instalment: On or before December 15 — at least 75% of advance tax, after adjusting earlier payments

• Fourth instalment: On or before March 15 — 100% of advance tax, after adjusting earlier payments

According to the Income Tax Department, taxpayers declaring business or professional income under the presumptive taxation schemes of Section 44AD or Section 44ADA are required to pay 100% of their advance tax liability in a single instalment on or before March 15.

Any tax paid on or before March 31 is also treated as advance tax for the relevant financial year.

How is interest calculated on late or short payment?

Failure to pay advance tax — or paying less than the required amount — does not attract a flat penalty, but interest, calculated under Sections 234B and 234C of the Income Tax Act.

• Section 234B: Applies when advance tax paid is less than 90% of the assessed tax. Interest is charged at 1% per month or part of a month, calculated as simple interest.

• Section 234C: Applies when individual instalments of advance tax are not paid on time or are short-paid. Interest is charged at 1% per month or part of a month on the shortfall for each instalment.

Explaining the impact, Soni says, “If you don’t pay advance tax on time or pay less than required, you must pay 1% interest per month under Sections 234C for instalment defaults and 234B if less than 90% of the tax liability is paid by year-end.”

Period for which interest is charged

Interest under Section 234B is levied from April 1 of the assessment year until the date of processing of income under Section 143(1), or until the completion of a regular assessment, as applicable.

What happens if advance tax is not paid?

If an assessee fails to pay advance tax in accordance with the prescribed schedule, they become liable for:

• Interest under Section 234B for default in payment of advance tax, and

• Interest under Section 234C for deferment or short payment of advance tax instalments.

In short, missing the advance tax deadline may not trigger an immediate penalty notice, but the interest burden can add up steadily — making timely compliance crucial for taxpayers with non-salary income.