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Are you aware that the third installment of advance tax for 2025 is due on December 15? Who is required to pay, how to calculate liability, and what penalties apply if you miss the deadline? Find out all the crucial details here.
December 15 marks the third installment deadline for advance tax 2025.
New Delhi: Advance tax, also called the 'Pay As You Earn Scheme', allows taxpayers to pay their tax liability in instalments over the financial year rather than as a lump sum at the end. Every assessee estimates their current income and calculates the tax liability. If the total estimated tax after adjusting for TDS exceeds Rs 10,000, advance tax must be paid.
The third installment due on December 15 2025 is a key checkpoint. By this date taxpayers are required to pay at least 75 percent of the total estimated tax for the year. This ensures that tax liabilities are met progressively, easing the burden at the time of filing returns.
Who Is Required To File Advance Tax?
Advance tax is applicable to both salaried and non-salaried individuals. Salaried employees usually meet their liability through TDS deductions, but those with insufficient TDS must pay advance tax. Freelancers, investors, and small business owners whose income is not fully subject to TDS need to pay special attention to deadlines.
Resident senior citizens without business or professional income are exempt from paying advance tax. However, all other taxpayers whose estimated tax liability exceeds Rs 10,000 must comply. This includes income from business, profession, capital gains, rent, or other sources.
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Failure to pay advance tax on time attracts mandatory interest. Section 234B applies for default in payment while Section 234C covers deferment or shortfall. Even if the remaining tax is paid later through self-assessment at the time of filing, interest is still levied for delays.
Experts warn that delaying payments can also create a large lump-sum liability at the end of the year, adding financial stress. For taxpayers with irregular income such as freelancers and business owners, missing the December 15 deadline can result in substantial interest and penalties.
Advance tax can be paid online through the income tax portal or offline at authorized banks using Challan No ITNS 280. Companies or individuals whose accounts are required to be audited under Section 44AB must pay advance tax electronically.
Taxpayers under the presumptive tax scheme under Section 44AD or 44ADA must pay 100 percent of their advance tax liability on or before March 15 of the previous financial year. This allows them to settle their tax obligation in a single instalment well ahead of the standard quarterly deadlines.
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The December 15 2025 advance tax deadline is crucial for maintaining compliance and avoiding penalties. Taxpayers should calculate their estimated liability accurately, ensure timely payments, and maintain records of transactions. Paying advance tax progressively not only reduces end-of-year stress but also prevents unnecessary interest payments under the Income-tax Act.
Understanding the rules, exemptions, and payment methods ensures smoother tax planning and financial management for the remainder of the financial year. Advance tax is a practical tool to manage cash flow, especially for individuals and businesses with fluctuating income.
