Advance Tax Calculator: Calculate Advance Tax Interest & Computation
Advance tax payment requires taxpayers to pay their income tax in instalments throughout the financial year, rather than paying as a lump sum at the end. It is applicable to individuals, companies, and business entities whose tax liability exceeds ₹10,000.
Advance tax computation is done by estimating the current financial year’s income and then applying the income tax rates applicable as per Income tax slabs. The advance tax payment calculation for each instalment is then done as per the applicable percentage of the total tax liability.
Let’s see how to calculate advance tax to avoid any penalty.
What is an Advance Tax Calculator?
Taxpayers can also easily get an estimate of their advance tax liability in India by using the advance tax calculator available on the official website of the IT department.
An advance tax calculator considers various factors such as income sources, deductions, exemptions, and applicable tax rates to provide tax estimates. By using this calculator, taxpayers can plan their finances better, avoid last-minute tax burdens, and ensure timely compliance with tax regulations.
How to Calculate Advance Tax Liability?
Advance tax payment calculation in India involves a step-by-step process. Follow these steps to estimate your advance tax:
Step 1: Estimate your Total Income for the Financial Year
Gather information on all your income sources for the entire financial year. Include the following heads of income to calculate the income earned:
- Salary
- Rental income
- Income from any interest earned from FDs, savings account, etc.
- Capital gains
- Income of minors if it is added to that of the taxpayer
- Any other income
Step 2: Calculate Deductions and Exemptions
Subtract eligible deductions from your total income that are applicable to you under various sections of the Income Tax Act, like 80C, 80D, etc.
Step 3: Consider TDS
If you have any Tax Deducted at Source (TDS) on certain income, subtract it from the total income as well. The amount received will be your taxable income. This is the amount on which you will calculate your income tax liability.
Step 4: Apply Applicable Tax Rates
As per the income tax slab applicable to your taxable income and regime opted, apply the corresponding income tax rates and calculate your payable income tax. Also, apply the 4% cess on the tax to arrive at your total income tax liability.
Step 5: Advance Tax Payment Calculation
Now, divide your total income tax liability for the financial year into four equal installments as follows:
- On or before June 15: 15% of the total tax liability
- On or before September 15: 45% of the total tax liability
- On or before December 15: 75% of the total tax liability
- On or before March 15: 100% of the total tax liability
Also, remember to consider the following points when doing advance tax calculation:
- The tax slab rates are applicable to you.
- Tax rebate under Section 87A.
- The TDS to be deducted from your income or any advance tax already paid.
Advance Tax Computation Explained Through Example
Let us understand how to use an advance tax calculator to know how much advance to pay, with the help of an example.
Suppose Rahul is a salaried taxpayer with the following income and investments:
- Annual Gross Income: ₹25,00,000
- Expenses: ₹12,00,000
- PPF: ₹50,000
- LIC Premium: ₹30,000
- Medical Insurance: ₹15,000
- TDS (Approximate): ₹50,000
- Fixed Deposit Interest: ₹8,000
| Advance Tax Estimation | Amount |
| Gross Income | ₹13,00,000 |
| Fixed Deposit Interest | ₹8,000 |
| Gross Total Income | ₹13,08,000 |
| Deductions under Chapter VI PPF Contribution |
₹50,000 |
| LIC Premium | ₹30,000 |
| Medical Insurance | ₹15,000 |
| Total Income | ₹12,13,000 |
| Tax Payable | ₹1,76,400 |
| Education Cess @ 4% | ₹7056 |
| Total | ₹1,83,456 |
| TDS | ₹50,000 |
| Advance Tax to be Paid | ₹1,33,456 |
Advance Tax Payment Calculation
| Due Date | Advance Tax to be Paid | Amount |
| 15 June | 15% | ₹20,000 |
| 15 September | 45% | ₹60,000 |
| 15 December | 75% | ₹1,00,000 |
| 15 March | 100% | ₹1,33,400 |
Advance Tax Interest Calculator for Default Payment
Failure to pay advance tax or underestimation of advance tax payment will attract penalty u/s 234B and 234C, including an additional interest of 1%. In case of default payment, you can check your penalty charges using the advance tax interest calculator.
Section 234B
Under this section, non-payment of advance tax or lower payment of advance tax attracts an interest of 1% on the unpaid tax amount. under 234B. To avoid this interest, taxpayers must pay at least 90% of the total tax as advance tax by 31st March.
Section 234C
Under this section, penalty charges are applicable if the taxpayer doesn’t pay advance tax on or before the due dates. The interest applicable is calculated as under:
Condition |
Penalty Interest Rate |
Period of Interest |
Amount on which interest is calculated |
If advance tax paid by 15th June is less than 15% |
1% per month |
3 months |
15% of amount (-) tax paid before June 15 |
If advance tax paid by 15th September is less than 45% |
1% per month |
3 months |
45% of amount (-) tax paid before September 15 |
If advance tax paid by 15th December is less than 75% |
1% per month |
3 months |
75% of amount (-) tax paid before December 15 |
If advance tax paid by 15th March is less than 100% |
1% per month |
1 month |
100% of amount (-) tax paid before March 15 |
FAQs on Advance Tax Calculator
Am I eligible to claim tax deduction under section 80C during advance tax computation?
Yes. You can consider all the applicable deductions while doing advance tax calculation for the fiscal year.
How can I check my advance tax liability?
You can get an estimation of your advance tax payment using the advance tax calculator. Just fill in your income and tax deduction details, and you will get an estimated amount of advance tax you are required to pay.
How is advance tax payment calculation done?
To calculate your advance tax liability, estimate your total income from all sources for a fiscal year, subtract eligible deductions, and apply the applicable income tax rates. Then divide the estimated tax liability into installments as per the due dates.
Can I include capital gains while calculating advance tax?
Yes, as capital gains earned during the financial year are considered part of your total income, they need to be included in the advance tax calculation.
What if I don’t pay or pay the wrong advance tax amount by making incorrect calculations?
Failure to pay advance tax or paying less tax due to incorrect advance tax computation may lead to penalty charges under sections 234B and 234C of the Income Tax Act. The interest levied is 1% per month or part of the month. You can calculate it using an advance tax interest calculator.