Advance Tax for Startups and Founders: The Four Instalments and 234B/234C
If your tax liability for the year exceeds ₹10,000, you must pay advance tax in four instalments — 15 June, 15 Sep, 15 Dec, 15 Mar. Miss them and Sections 234B/234C charge interest. Here's the schedule and the math.
If your total tax for the year (after TDS) is likely to exceed ₹10,000, you must pay advance tax in four instalments — by 15 June (15%), 15 September (45%), 15 December (75%) and 15 March (100%). Underpay and Section 234C charges interest instalment-by-instalment; pay less than 90% of the year's tax by year-end and Section 234B adds more. It applies to companies, LLPs, and founders with income beyond salary — and it's a cash-flow event startups routinely forget.
Who has to pay advance tax
Anyone whose estimated tax liability for the year exceeds ₹10,000 after accounting for TDS — which covers most profitable companies and LLPs, and founders with business, capital-gains, or other non-salary income where TDS didn't cover it. Advance tax is "pay as you earn" — the government wants the tax during the year, not in a lump at the end.
The four instalments
| Due date | Cumulative % of estimated tax |
|---|---|
| 15 June | 15% |
| 15 September | 45% |
| 15 December | 75% |
| 15 March | 100% |
Companies follow this schedule. (Taxpayers under the presumptive scheme, 44AD/44ADA, pay in a single instalment by 15 March.)
The two interest charges
- Section 234C — interest at 1% per month for deferring or underpaying an instalment, computed instalment-by-instalment against the cumulative percentages above. Miss the June instalment and 234C starts there.
- Section 234B — interest at 1% per month if you pay less than 90% of the assessed tax as advance tax by year-end, from 1 April of the assessment year until you pay.
They stack, and because they're simple monthly interest, a large under-payment over several months adds up.
Why startups miss it
Two reasons: early-stage founders think "we're not profitable, so no tax" (true until you are — then it's on you to start), and busy teams treat tax as a year-end event. Advance tax is a quarterly cash outflow that needs to be estimated and paid during the year — which is also why it's worth planning the cash for (see CashStack's tax & GST reserve calculator).
Put the four dates on your calendar
Advance tax is four fixed dates a year that quietly accrue interest if missed. ComplianceStack tracks the instalments as dated tasks with reminders, and stores the challans as evidence. Get your free compliance health check — or estimate with the advance-tax calculator.
FAQs
- When is advance tax due?
- In four instalments: 15% by 15 June, 45% by 15 September, 75% by 15 December, and 100% by 15 March.
- Who has to pay advance tax?
- Anyone whose estimated tax for the year exceeds ₹10,000 after TDS — most profitable companies and LLPs, and founders with non-salary income not fully covered by TDS.
- What are Sections 234B and 234C?
- 234C charges 1% per month for deferring or underpaying an advance-tax instalment; 234B charges 1% per month if you've paid less than 90% of the year's tax as advance tax by year-end.
- Do presumptive taxpayers pay quarterly?
- No — taxpayers under 44AD/44ADA pay their advance tax in a single instalment by 15 March.
This article is general information, not tax, legal or accounting advice. Statutory timelines and thresholds change by notification — confirm applicability and interpretation with your CA, CS, or lawyer before acting.
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