Throughout the year, you incur various taxes, including TDS and other deductions. At the same time, you may also have multiple income sources along with your primary source, such as side hustles and passive earnings, that contribute to your financial growth. Accounting for these is crucial when tax filing, and so is understanding how advance tax vs self-assessment tax are calculated.
For this, you need to understand the key differences between advance tax and self-assessment tax. This guide breaks down what they are, explaining when to pay, how to calculate, and how they impact your tax filing. Check out the following table highlighting the main differences:
| Aspect | Advance Tax | Self-Assessment Tax |
|---|
| What It Is | Paid in advance during the year on income earned | Paid after adjusting advance tax, TDS, and TCS if any tax is still due |
| When It’s Paid | In four instalments—15% by 15th June, 45% by 15th Sept, 75% by 15th Dec, and 100% by 15th Mar | Any time before filing your income tax return |
| Who Needs to Pay | If your total tax liability exceeds ₹10,000 in a financial year | If you're filing a tax return and still have unpaid tax from other sources after adjustments |
| Fixed Payment Dates | Yes, with specific instalment deadlines | No fixed dates, but it must be paid before filing your return |
| Penalty for Late Payment | Interest applies if not paid on time | Interest on outstanding tax if not cleared before filing |
| Mode of Payment | Paid using challan as per instalments | Paid using challan 280 before filing your return |
| Who Pays It | Salaried individuals, business owners, freelancers, etc. | Anyone filing a tax return with unpaid tax |
| How to Calculate | Compute total income (salary + other sources), Subtract deductions, Calculate total tax, Add cess, Subtract TDS, Pay in four installments | Compute tax on total income Add interest under sections 234A/B/C Subtract relief and MAT credit Deduct advance tax and TDS The remaining amount is your self-assessment tax |
What Is Advance Tax and When Is It Applicable?
You pay tax in instalments during the financial year instead of a lump sum at the end. Payments are based on your income and as per deadlines set by the Income Tax Department.
Eligibility for Advance Tax: Who Needs to Pay?
You need to pay if your total tax liability exceeds ₹10,000 in a financial year. This applies to:
Salaried individuals
Freelancers
Professionals
Business owners
How to Calculate an Advance Tax
If you know when advance tax is applicable, you can calculate it as follows:
Calculate your gross total income by adding your salary and other income sources like rent or interest
If following the old tax regime, subtract eligible deductions and exemptions
Determine your total tax liability based on your taxable income
Add health and education cess to this amount
Subtract any TDS or TCS already paid during the year
Use this formula:
Advance Tax = (Total Tax Liability + Cess) - (TDS + TCS)
How to File Advance Tax Payments
Go to the Income Tax Department's e-filing portal.
On the homepage's left side, locate the Quick Links section and click e-Pay. Tax. Alternatively, you can search for e-Pay Tax in the search bar.
On the e-Pay Tax page, enter your PAN number, confirm it by re-entering, input your mobile number, and click Continue.
Enter the 6-digit OTP sent to your mobile number and click Continue.
Select Income Tax in the first box and click Proceed.
Choose the assessment year 2025-26 and select Advance Tax (100) as the payment type, then click Continue.
Fill in all required tax details as prompted.
Select your preferred payment method and bank, then click Continue.
Review the challan details. If everything is correct, click Pay Now. Edit details if necessary.
After payment, you’ll receive an acknowledgement on the next screen. Save this receipt for your records.
Check Also: Self-Assessment Tax: Key Facts You Should Know
Common Mistakes to Avoid When Paying Advance Tax
Paying taxes requires careful attention and consideration. Here are some common mistakes you must avoid when paying advance tax:
Choosing the wrong form
Selecting the wrong assessment year
Providing incorrect personal information
Failing to disclose all income sources
Entering incorrect details
Not reconciling income and TDS with Form 26AS
Submitting multiple Form 16s from different employers
Read Also: Advance Tax Payment Mistakes to Avoid
Understanding Self-Assessment Tax
This is the tax you pay on your income after accounting for advance tax, TDS, and TCS. It’s the final tax amount that remains unpaid for the financial year and must be paid under the self assessment tax section of the Income Tax portal. You need to settle it before filing your income tax return.
How to File Self-Assessment Tax
Here’s how you can file your self-assessment tax online in simple steps:
Visit the Income Tax e-filing portal and log in.
Click the e-File tab and choose e-Pay Tax.
Click the New Payment button.
Select Income Tax and click Proceed.
Choose the correct Assessment Year and select Self-Assessment Tax (300).
Enter the tax amount and continue.
Select your bank and preferred payment method.
Complete the payment and download the challan for future reference.
When to Pay Self-Assessment Tax and How It Works
There’s no fixed date to pay the self-assessment tax, but make sure to clear it before filing your ITR. The tax is calculated after accounting for advance tax, TDS, and other payments. If there’s any outstanding liability, settle it to avoid penalties or interest.
Conclusion
In the end, it's clear that advance and self-assessment taxes apply under different conditions. Understanding the differences between advance tax and self-assessment tax and the legalities involved helps you decide at what time you need to file for which taxes. Moreover, you can report your taxes properly and avoid any discrepancies.
Frequently Asked Questions
What is the difference between advance tax and self-assessment tax?
Advance tax is paid in instalments during the financial year. On the other hand, self-assessment tax is paid after the financial year to clear any remaining tax before filing the ITR.
When is an advance tax applicable?
Advance tax applies if your total tax liability exceeds ₹10,000 in a financial year after adjusting TDS. It must be paid in instalments according to the Income Tax Department’s due dates.
Who is eligible for advance tax payments?
Advance tax applies to:
Salaried individuals
Freelancers
Businesses
How do I calculate my self-assessment tax liability?
To calculate your self-assessment tax liability:
Deduce all allowed deductions and exemptions under sections like 80D, 80C, etc.
Calculate the tax based on applicable slab rates.
Use this formula:[(A + B) - (C + D + E + F + G)] = Self-assessment tax amount.
Where:
A = Tax payable on total income
B = Interest liability (if any)
C = Relief under Section 90/90A/91
D = MAT credit under Section 115JAA
E = Advance tax paid
F = TDS/ TCS deducted
G = Any other deductions
Can I pay both advance tax and self-assessment tax?
Yes, you can pay both. Any advance tax and TDS you’ve already paid will be deducted from your total tax when you file your return. You’ll pay the remaining amount as self-assessment tax.
What happens if I miss the advance tax deadline?
If you miss the advance tax deadline, you’ll be charged 1% interest per month on the unpaid amount.
How do I claim credit for advance tax payments?
To claim credit for advance tax payments, you can deduct amounts under Section 80C while calculating your taxable income.
Who is liable to pay advance tax?
Any individual, freelancer, or business with an estimated annual tax liability of ₹10,000 or more must pay advance tax. Resident senior citizens without business or professional income are exempt from this requirement.
When and how should I pay advance tax?
Advance tax is paid in instalments during the financial year if your tax liability exceeds ₹10,000. It can be paid online using Challan ITNS 280 through the Income Tax Department’s portal by the specified due dates.
What if I miss the advance tax payment deadline?
If you miss an advance tax deadline, interest is charged under Sections 234B and 234C of the Income Tax Act. You must pay 1% simple interest per month on the shortfall until the tax is paid.
