Advance Tax requires businesses and individuals with annual tax liability above ₹10,000 to pay income tax in instalments throughout the year rather than in a lump sum at year-end.

India Tax & Compliance

What is Advance Tax?

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Advance Tax: Advance Tax requires businesses and individuals with annual tax liability above ₹10,000 to pay income tax in instalments throughout the year rather than in a lump sum at year-end.

Advance Tax Instalments

Advance Tax is paid quarterly: 15% by 15 June (Q1), 45% by 15 September (Q2), 75% by 15 December (Q3), and 100% by 15 March (Q4). Each instalment pays the cumulative percentage of the full year's estimated tax. Underpayment attracts 1% interest per month under Sections 234B and 234C.

Estimating Advance Tax with ERP

Use ERPNext's P&L Statement at the end of each quarter to project annual profit. Deduct depreciation (Income Tax Act WDV rates), admissible deductions, and exemptions to estimate taxable income. Apply the applicable corporate tax rate (22% under 115BAA or 30% standard) to calculate the instalment due.

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