# Advance Tax Guide: Who Pays, When, and How Much

> How advance tax works in India, who needs to pay it, the installment schedule, and the 234B and 234C interest you avoid by paying on time.
- **Published**: 2026-08-16
- **Modified**: 2026-08-16
- **Category**: tax-planning
- **URL**: https://www.tldr.money/articles/tax-planning/advance-tax-guide

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Use this with the full [tax planning in India](/tax-planning) guide. Estimate your installments with the [advance tax calculator](/tools/advance-tax-calculator).

## What advance tax is

Advance tax is paying your income tax during the year as you earn, rather than all at once when you file. If your total tax liability for the year exceeds the prescribed threshold, the law expects you to pay it in installments across the year. It applies to salaried people with significant non-salary income, and especially to freelancers and business owners.

## Who needs to pay

- **Freelancers and the self-employed** whose tax after TDS crosses the threshold.
- **Salaried people** with meaningful income beyond salary, such as capital gains, interest, or rent, where TDS does not cover the full liability.
- Senior citizens without business income are generally exempt from advance tax; confirm current rules.

If your employer's TDS already covers your liability, you may have little or no advance tax to pay.

## The installment schedule

Advance tax is paid in quarterly installments through the financial year, with a rising cumulative percentage due at each date. Because the exact dates and percentages are set by rule and can change, confirm the current-year schedule on the official portal before you plan.

## The interest you avoid: 234B and 234C

Missing or underpaying advance tax attracts interest:

- **Section 234B:** interest for not paying at least the required share of advance tax by year-end.
- **Section 234C:** interest for missing or underpaying the individual quarterly installments.

Both accrue monthly, so paying on schedule is simply cheaper than catching up later.

## How to manage advance tax

1. **Estimate income early.** Project your annual income and deductions.
2. **Compute the liability.** Use the [income tax calculator](/tools/income-tax-calculator) to estimate tax, and the [advance tax calculator](/tools/advance-tax-calculator) to split it into installments.
3. **Pay each installment on time.** Set reminders around each due date.
4. **Revise as you go.** If income changes during the year, adjust later installments.
5. **Reconcile at filing.** Advance tax paid is adjusted against your final liability; see [how to file ITR online](/articles/tax-planning/how-to-file-itr-online).

Freelancers should also line up [deductions](/articles/tax-planning/income-tax-deductions-guide) and the right [ITR form](/articles/tax-planning/which-itr-form-to-file) while estimating advance tax.
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