Advance tax due dates and Section 234C

Advance tax is paid in four instalments, on 15 June, 15 September, 15 December and 15 March of the financial year. The amounts are cumulative rather than equal: 15 percent of the year’s liability by the first date, 45 percent by the second, 75 percent by the third, and the whole of it by the fourth.

You are liable to pay it if your estimated tax for the year, after subtracting tax already deducted at source, exceeds 10,000 rupees. For most salaried people TDS covers that and nothing is left to pay. Advance tax becomes real the moment income arrives that nobody deducted tax on, which in practice means capital gains, freelance income, rent, or interest that outran the bank’s deduction.

The schedule, and the reason it is front-loaded

Due date	Cumulative advance tax payable
15 June	15 percent
15 September	45 percent
15 December	75 percent
15 March	100 percent

Cumulative is the word that matters. The September instalment is not another 15 percent, it takes your total paid to 45 percent. Someone who paid nothing in June and wants to be current in September owes the whole 45 percent then, not a catch-up instalment plus a fresh one.

The last date is 15 March, not 31 March. The final fortnight of the financial year is not part of the schedule, which surprises people who have mentally filed advance tax under year-end tasks.

Who does not have to pay it

Two exemptions do most of the work.

Resident senior citizens without business income. A resident individual aged 60 or above at any time during the year, with no income under the head profits and gains of business or profession, is not liable to pay advance tax. The exemption does not depend on how much they earn from pension, interest, dividends or capital gains. It falls away entirely if they have business or professional income.

Everyone below the threshold. If estimated tax after TDS is 10,000 rupees or less, there is nothing to pay in instalments.

How Section 234C interest is actually computed

Section 234C charges interest at 1 percent for every month or part of a month on the shortfall. The period differs by instalment: three months for a shortfall in the first, second or third instalment, and one month for a shortfall in the last.

There is also a tolerance built into the first two dates. Interest on the June instalment is triggered where less than 12 percent has been paid, and on the September instalment where less than 36 percent has been paid, even though the scheduled targets are 15 percent and 45 percent. The tolerance exists because estimating a full year’s income in June is genuinely hard. It does not extend to the December or March instalments.

Capital gains and windfall income are treated separately again. Tax on a gain you could not have foreseen is not expected in an instalment that fell due before the gain arose, provided it is paid in the remaining instalments or by the end of the year.

Section 234B is the one that runs longer

Section 234C is about the timing of instalments within the year. Section 234B is about being short at the end of it, and charges 1 percent per month from 1 April of the assessment year until the tax is paid. It bites where less than 90 percent of the assessed tax was paid by the end of the financial year.

The practical difference is duration. A 234C charge is capped at three months per instalment. A 234B charge keeps running until you actually pay, so a return filed in December of the assessment year carries roughly nine months of it.

Where advance tax usually goes wrong

• The instalments are four equal payments. They are not. The percentages are cumulative and unequal, and treating them as four quarters of 25 percent leaves you short at every date except the last.
• The final date is 31 March. It is 15 March. Paying on 20 March means the last instalment was short on its due date.
• TDS on salary means advance tax never applies. It applies to the income your employer knows nothing about. Selling shares, letting a flat or invoicing a client creates a liability your payroll TDS was never sized for.
• Section 234C interest runs until you file. It does not. It is fixed at three months per missed instalment, or one for the last. The provision that keeps accruing is Section 234B.
• A senior citizen with rental income must pay advance tax. Rent is not business income, so a resident senior citizen with rental, pension, interest or capital gains income remains exempt. Only business or professional income removes the exemption.