Advance tax for freelancers: what it is and when to pay
If you've only ever had salary income with TDS automatically deducted, advance tax can catch you off guard as a freelancer — because nobody is automatically withholding tax through the year on your behalf the same way.
What advance tax is
Advance tax means paying your estimated income tax liability in installments during the financial year, rather than as one lump sum when you file your return. It applies to anyone whose total tax liability for the year (after TDS credits) exceeds a modest threshold — which most actively freelancing individuals will cross.
The typical due dates
- By 15th June — 15% of estimated tax liability
- By 15th September — 45% of estimated tax liability (cumulative)
- By 15th December — 75% of estimated tax liability (cumulative)
- By 15th March — 100% of estimated tax liability (cumulative)
How to estimate what you owe
Estimate your total expected income for the year (using your invoicing pace so far as a guide), calculate the expected tax using either presumptive taxation (Section 44ADA) or actual profit, subtract any TDS already deducted by clients, and pay the remaining amount in the quarterly proportions above.
What happens if you miss a payment
Missing or underpaying advance tax installments attracts interest under Sections 234B and 234C — not a heavy penalty, but a real cost that compounds if ignored across multiple quarters. It's calculated as simple interest on the shortfall, so catching up sooner rather than later limits the damage.