Advance tax: the four dates, and what missing them costs
Sections 234B and 234C are not the same charge, the percentages are cumulative rather than incremental, and there is a safe harbour most people never use.
Advance tax catches out people who are otherwise perfectly compliant, because the rules contain three things that are not obvious.
The percentages are cumulative
15% by 15 June, 45% by 15 September, 75% by 15 December, 100% by 15 March. Those are running totals, not four separate instalments of 15%, 30%, 30% and 25%. By September you should have paid 45% in total, not 45% that quarter.
234C and 234B are different charges
234C is interest for deferring an instalment. It runs for three months on each shortfall at the first three dates, and one month at the last. Because it is calculated per instalment, missing every date on a ₹2,08,000 liability costs about ₹10,500 — not the ₹86,000 you get if you mistakenly apply 3% to the full liability four times.
234B is different: interest for having paid less than 90% of the liability by the year end, running at 1% a month from 1 April until the tax is paid. You can owe both.
The Advance Tax Calculator works out each instalment, the shortfall against it and the interest that follows.
The safe harbour nobody uses
Section 234C accepts 12% by 15 June and 36% by 15 September in place of 15% and 45%, provided the shortfall did not arise from underestimating. That is a genuine concession, not a rounding tolerance, and it exists precisely because income in the first half of the year is hard to forecast.
Late capital gains are protected
Where capital gains or lottery income arise after an instalment date, tax on them is excluded from 234C if paid in the remaining instalments. Sell a property in February and you are not penalised for not having predicted it in June. That protection does not extend to ordinary business income, which you are expected to estimate.
Presumptive taxpayers pay once
Under sections 44AD and 44ADA the whole liability falls due by 15 March in a single instalment. Simpler, but unforgiving — miss it and 234C applies to the entire amount. Check your position with the Presumptive Tax Calculator.
Who is exempt
Anyone whose liability after TDS is under ₹10,000, and resident senior citizens without business income. Everyone else pays.