Third Installment of Advance Tax (Q3)

Under Section 208 of the Income Tax Act, taxpayers with an estimated net tax liability exceeding ₹10,000 must pay their taxes in advance. For the third installment due on December 15th, you are required to have paid at least 75% of your total estimated advance tax for the financial year (less any amounts already paid in the first and second installments).

Important Considerations:

1. Penalties for Shortfall: If the cumulative advance tax paid on or before December 15th is less than 75% of your total assessed tax liability, it attracts penal interest under Section 234C at a flat rate of 1% per month for three months on the short amount. 2. Capital Gains Adjustments: December is a critical time to review your portfolio. If you have realized substantial short-term or long-term capital gains since your last installment, you must recalculate your tax liability and pay the proportional advance tax in this installment. Advance tax on capital gains is only payable in the installments remaining after the gain was made. 3. Presumptive Taxation Exemption: Taxpayers who have opted for the Presumptive Taxation Scheme under Section 44AD or Section 44ADA are still exempt from this December deadline. Their single 100% payment is due by March 15th.