How to plan advance tax and avoid interest

You must pay advance tax if your total tax for the year, after TDS already deducted, comes to Rs 10,000 or more. Salaried people whose TDS covers everything usually don't need to — but the moment you add freelance income, rent, capital gains or interest, you likely do.

Advance tax is due in four instalments: by 15 June (15% of the year's tax), 15 September (45% cumulative), 15 December (75% cumulative) and 15 March (100%). Paying the right cumulative percentage by each date is what keeps you clear of interest.

Section 234C charges 1% a month when you underpay an instalment; Section 234B charges 1% a month from April if you've paid less than 90% of your tax by year-end. Both are simple interest, and both are entirely avoidable by paying on time.

Don't wait for the year to end. Project your income for the full year, subtract eligible deductions and any TDS already deducted, and pay the balance across the instalment dates. Re-estimate each quarter as your income becomes clearer — a rough-but-timely estimate beats a perfect-but-late one.

Capital gains, a large bonus or a one-off project can spike your tax mid-year. The rules allow some leeway for income that genuinely arises late in the year, but the safest move is to pay the tax on a windfall in the very next instalment rather than deferring it.