If you're a freelancer, creator or consultant, most of your income arrives with little or no tax deducted. The law makes up for that with advance tax: you pay your tax in instalments during the year instead of all at once when you file. This guide shows how to calculate it, and how the interest works if you pay late or too little, with worked examples.
For the basics (who pays and the four dates), see our advance tax guide for freelancers. This post goes deeper into the calculation.
Step 1: Estimate your income for the whole year
Advance tax is based on what you expect to earn from April to March. Early in the year you won't know exactly, and that's fine. Use your best estimate:
- Look at last year's income and what you have lined up this year.
- Include all sources: Indian clients, foreign clients, AdSense, brand deals, interest.
- Subtract your expected work expenses, or take 50% of receipts if you use presumptive taxation.
You can update the estimate at every instalment date. If your income grows, pay more at the next date.
Step 2: Work out the tax on that income
Apply the slab rates for your chosen regime, the rebate if it applies, and 4% cess. The calculator does this in one step.
Step 3: Subtract TDS
Subtract the TDS your clients will deduct during the year, for example 10% on professional fees from companies. What's left is your net tax.
Step 4: Check if you have to pay
If the net tax is ₹10,000 or more, you need to pay advance tax. Below that, you can pay the whole amount as self-assessment tax before you file.
Step 5: Split it across the four dates
The instalments are cumulative: each date tells you how much you should have paid in total by then. For a yearly tax of ₹1,20,000:
| Due date | Paid by then (cumulative) | Pay on this date |
|---|---|---|
| 15 June | 15% = ₹18,000 | ₹18,000 |
| 15 September | 45% = ₹54,000 | ₹36,000 |
| 15 December | 75% = ₹90,000 | ₹36,000 |
| 15 March | 100% = ₹1,20,000 | ₹30,000 |
If you use presumptive taxation (44ADA / 44AD, now section 58), you can pay the whole amount in one instalment by 15 March instead.
Free toolAdvance Tax CalculatorCalculate your instalments and get the dates in your calendar.Interest if you miss an instalment (234C)
If you've paid less than the required share by any due date, you pay simple interest at 1% a month on the shortfall:
- 3 months of interest (3%) on the shortfall at 15 June, 15 September and 15 December
- 1 month (1%) on the shortfall at 15 March
The safe limits
There's some breathing room for the first two dates. You pay no interest for the June instalment if you've paid at least 12% of the year's tax by 15 June, and none for September if you've paid at least 36% by 15 September.
This was section 234C of the old Act; from 1 April 2026 it's section 425 of the Income-tax Act 2025. The rates and the safe limits are the same.
Interest if you pay too little in the year (234B)
If, by 31 March, you've paid less than 90% of your year's tax through advance tax, you pay a second kind of interest: 1% a month on the unpaid amount, from 1 April until you pay it (usually when you file). A part of a month counts as a full month.
This was section 234B; it's now section 424 of the 2025 Act.
Worked examples
All three examples assume a yearly tax of ₹1,20,000 after TDS, with any balance paid 4 months after the year ends (around July).
Example 1: nothing paid during the year
| Date | Should have paid | Actually paid | Shortfall | Interest |
|---|---|---|---|---|
| 15 Jun | ₹18,000 | ₹0 | ₹18,000 | ₹540 (3%) |
| 15 Sept | ₹54,000 | ₹0 | ₹54,000 | ₹1,620 (3%) |
| 15 Dec | ₹90,000 | ₹0 | ₹90,000 | ₹2,700 (3%) |
| 15 Mar | ₹1,20,000 | ₹0 | ₹1,20,000 | ₹1,200 (1%) |
| Interest for late instalments (234C, now section 425) | ₹6,060 | |||
| Interest on tax unpaid after 31 March, for 4 months (234B, now section 424) | ₹4,800 | |||
| Total interest | ₹10,860 | |||
Skipping advance tax entirely costs you interest twice: once for each missed instalment, and again for the months after March.
Example 2: everything paid on time
| Date | Should have paid | Actually paid | Shortfall | Interest |
|---|---|---|---|---|
| 15 Jun | ₹18,000 | ₹18,000 | ₹0 | ₹0 |
| 15 Sept | ₹54,000 | ₹54,000 | ₹0 | ₹0 |
| 15 Dec | ₹90,000 | ₹90,000 | ₹0 | ₹0 |
| 15 Mar | ₹1,20,000 | ₹1,20,000 | ₹0 | ₹0 |
| Interest for late instalments (234C, now section 425) | ₹0 | |||
| Interest on tax unpaid after 31 March, for 4 months (234B, now section 424) | ₹0 | |||
| Total interest | ₹0 | |||
No interest at all.
Example 3: a little short early, caught up later
You paid ₹15,000 by June (12.5%), ₹45,000 by September (37.5%), then the full amounts by December and March.
| Date | Should have paid | Actually paid | Shortfall | Interest |
|---|---|---|---|---|
| 15 Jun | ₹18,000 | ₹15,000 | ₹3,000 | ₹0 (safe limit met) |
| 15 Sept | ₹54,000 | ₹45,000 | ₹9,000 | ₹0 (safe limit met) |
| 15 Dec | ₹90,000 | ₹90,000 | ₹0 | ₹0 |
| 15 Mar | ₹1,20,000 | ₹1,20,000 | ₹0 | ₹0 |
| Interest for late instalments (234C, now section 425) | ₹0 | |||
| Interest on tax unpaid after 31 March, for 4 months (234B, now section 424) | ₹0 | |||
| Total interest | ₹0 | |||
Because you crossed the 12% and 36% safe limits, the small shortfalls in June and September cost nothing.
When income arrives late in the year
If part of your income is something you couldn't have predicted, such as capital gains or business income arising for the first time, you don't pay deferment interest on it as long as you pay the tax on it in the remaining instalments (or by 31 March).
How to pay
On the income tax e-filing portal, open e-Pay Tax, choose the tax year and Advance tax, and pay by net banking, UPI or card. Save the challan; you'll enter it in your return.
The advance tax calculator works out your exact instalments from your income and TDS, and adds the four dates to your calendar.
Free toolAdvance Tax CalculatorWork out your advance tax in a minute.