Quarterly advance tax computation & payment

Category: Income Tax. From ₹1,999. Typical timeline: 1–2 days.

Overview

Advance and self-assessment tax services cover the quarterly estimation and payment of income tax as it is earned rather than at year-end, a requirement for anyone whose annual tax liability exceeds ₹10,000 after TDS credit. Getting the quarterly instalments right — 15% by mid-June, 45% by mid-September, 75% by mid-December and 100% by mid-March — avoids interest charges that accrue automatically under Sections 234B and 234C for shortfall or delay.

Who needs it

• Freelancers, consultants and professionals whose clients do not deduct full TDS
• Business owners with profits not fully covered under TDS provisions
• Investors with capital gains, interest or rental income where TDS deduction is partial or absent
• Salaried individuals with significant additional income from moonlighting, investments or rent

Eligibility

• Individuals, professionals and businesses whose estimated tax liability for the year exceeds ₹10,000 after TDS
• Freelancers and consultants with income not fully covered by TDS deduction
• Companies and firms liable to pay advance tax on business profits
• Taxpayers under the presumptive taxation scheme who must pay their entire advance tax by 15 March

Documents required

• Estimated income computation for the financial year across all heads of income
• TDS already deducted or expected to be deducted during the year
• Bank statements and business financials to project income for remaining quarters
• PAN and prior year tax computation for reference

Process

1. Income estimation — Project total income for the financial year based on actuals to date and reasonable estimates for remaining months.
2. Liability computation — Calculate total tax payable for the year and reduce it by TDS already deducted or expected.
3. Instalment calculation — Determine the cumulative instalment due for the quarter as per the prescribed percentage schedule.
4. Challan payment — Generate and pay the advance tax challan (Challan 280) through the income tax portal or authorised bank.
5. Quarterly revision — Revisit the estimate each quarter and adjust the next instalment if actual income differs materially.

Government fees

• Advance Tax Payment (Challan 280): No separate government fee — payment is the tax liability itself
• Interest for shortfall (Sections 234B/234C): 1% per month on the shortfall amount

Professional fee

Professional fee starts at ₹1,999 per quarter for income estimation, liability computation and challan generation, with ongoing quarterly engagement priced together for the full year.

Timeline

Computation and challan generation is typically completed within 1-2 working days of receiving income details, well ahead of each quarterly due date.

Deliverables

• Quarterly advance tax computation working
• Paid challan (Challan 280) with acknowledgment
• Running reconciliation of tax paid against estimated annual liability
• Interest exposure estimate if any instalment is delayed

Frequently asked questions

Who is exempt from paying advance tax?

Resident senior citizens (60 years or above) not having income from business or profession are exempt from paying advance tax.

What if my income estimate turns out to be wrong?

You can revise the estimate in the next instalment; any shortfall from the year's actual liability attracts interest under Sections 234B and 234C, but the cumulative percentage schedule allows correction each quarter.

Is advance tax different from self-assessment tax?

Advance tax is paid in instalments during the financial year, while self-assessment tax is the balance tax paid at the time of filing the return after accounting for advance tax and TDS already paid.

Common mistakes

• Underestimating income for the year and paying instalments below the required cumulative percentage
• Missing a quarterly due date entirely, resulting in cascading interest under Section 234C
• Not accounting for capital gains or one-time income realised late in the year while computing the final instalment
• Assuming TDS deducted by clients fully covers the tax liability without checking the actual shortfall

Penalties for non-compliance

• Interest at 1% per month under Section 234C for shortfall in any quarterly instalment against the prescribed percentage
• Interest at 1% per month under Section 234B for failure to pay at least 90% of assessed tax as advance tax by the end of the financial year

Legal references

• Income Tax Act, 1961, Sections 208 to 211 — liability and schedule for advance tax payment
• Section 234B — interest for default in payment of advance tax
• Section 234C — interest for deferment of advance tax instalments
• Section 44AD/44ADA — presumptive taxation scheme instalment schedule (single instalment by 15 March)