Advance tax: Here's how to calculate and pay your final instalment for the fiscal year

March 15 is the last date to pay advance tax for the current financial year. Advance tax is essentially the tax you pay on all other income besides your salary.

If your total tax liability from income streams like interest, rent, capital gains and so on is more than ₹10,000 (after adjusting for tax deducted and credited at source–TDS and TCS) instead of paying the total tax due when filing your income tax return (ITR), you have to pay it in four instalments over the course of the year.

The due dates for these four instalments are 15 June, 15 September, 15 December and 15 March.

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“The taxpayer is required to pay tax on a proportionate basis in these four instalments," said Nitesh Buddhadev, founder of Nimit Consultancy. By the last due date, at least 90% of the total tax should be paid, or else penalties will be levied in the form of interest under sections 234B and 234C of the Income Tax Act.

Mint explains how to correctly make your final advance tax payment for the fiscal year.

The total amount you will pay as advance tax must be estimated at the start of the financial year and paid in four portions. Income streams can be fixed, like rent and interest, or variable, like capital gains and lottery winnings. For the latter, it may not be possible to estimate income in advance, so the tax is payable in the quarter in which the gains are earned.

This is crucial for those who plan to sell a property before 31 March. These taxpayers must calculate the approximate total income and pay tax on it before 15 March. Bhawna Kakkar, chartered accountant and founder, Kakkar & Company, Chartered Accountants said if the property is sold between 15