Key takeaways
✓
Advance tax applies if total tax liability exceeds ₹10,000 in a year✓
Capital gains from mutual fund sales count as income for advance tax✓
Paid in four instalments: June 15, September 15, December 15, March 15✓
Missing deadlines: 1% monthly interest under Sections 234B and 234C✓
For salaried people, TDS usually covers this — but not if you have large capital gains👨💻
RahulAge 38·Product manager, Bengaluru
"
I sold some funds in August and made ₹4 lakh in gains. I planned to pay the tax in July next year when filing ITR.
At filing, Rahul discovered he owed ₹3,600 in interest under Section 234B for not paying advance tax. He had the option to pay during the year in instalments — and didn't know. If his gains had been ₹40 lakh, the interest would have been ₹36,000.
Advance tax instalment schedule
📌
When a salaried investor needs to pay advance tax
Ravi earns ₹14 lakh salary. His employer handles TDS — he owes no advance tax on salary.
In October, Ravi sells equity funds and makes ₹4 lakh LTCG.
Tax: (₹4L − ₹1.25L exemption) × 12.5% = ₹34,375
Since this exceeds ₹10,000 and was not covered by TDS:
Ravi must pay advance tax by December 15: 75% × ₹34,375 = ₹25,781
And the balance by March 15: remaining ₹8,594
If he does not: 1% per month interest on shortfall from September 15 onward.
How to pay advance tax — step by step
1
Estimate your capital gains
Whenever you make a significant mutual fund redemption, calculate the approximate tax: (gains − ₹1.25L LTCG exemption) × 12.5% for equity funds held over 12 months.
2
Check if it exceeds ₹10,000
If the tax from capital gains (after accounting for TDS on salary) exceeds ₹10,000, advance tax applies.
3
Pay via IT portal
Go to incometax.gov.in → e-Pay Tax → Challan 280 → select 'Advance Tax' → enter Assessment Year as current year + 1 → pay via net banking or debit card.
4
Save the challan
Download and save the payment challan. You will need this when filing ITR to claim the advance tax paid against your total liability.
⚠Educational content only. Numbers shown are illustrative — actual returns vary. This is not investment advice. Consult a SEBI-registered financial advisor before investing.
Join the discussion
Questions, thoughts, or personal experiences — all welcome.
Be specific — it helps others.
Loading...