Advance tax for founders and NRIs: the four dates and how to size them.
The 15 Jun / 15 Sep / 15 Dec / 15 Mar instalments, why one-off income breaks them, and how to avoid 234B/234C interest.
Advance tax is "pay as you earn," in four instalments. For salaried employees with TDS it rarely bites — but for founders and NRIs with capital gains, ESOP income or consulting spikes, missing it means interest under Sections 234B and 234C.
The four instalments
For most taxpayers, cumulative advance tax is due as:
- 15% by 15 June
- 45% by 15 September
- 75% by 15 December
- 100% by 15 March
These are cumulative targets of your total estimated liability for the year, net of TDS.
Why one-off income breaks the schedule
The schedule assumes income spread evenly. A capital gain, an ESOP exercise, a dividend or a consulting bonus in, say, December throws the earlier instalments off. (For genuinely unforeseeable capital gains, the rules let you pay the tax in the remaining instalments — a relief worth knowing.)
Interest under 234B and 234C
- 234C charges interest for shortfall in each instalment (deferment).
- 234B charges interest where less than 90% of the liability is paid by year-end.
Both run at 1% per month — small per month, meaningful over time and across a large gain.
A quick sizing method
- Estimate full-year income, including known one-offs.
- Compute tax; subtract TDS already deducted and earlier instalments.
- Pay the cumulative target by each date — and re-estimate after any large event.
A worked example: the January secondary sale
A founder sells unlisted shares in a secondary in January for a long-term gain of ₹1 crore. Tax at 12.5% plus cess is about ₹13 lakh. Under the capital-gains relief, nothing was due in the June, September or December instalments — the gain didn't exist yet. Paying the full ₹13 lakh by 15 March keeps 234C at zero. Miss March and pay in July with the return instead: roughly four months of interest under 234B on the shortfall, about ₹50,000 — avoidable with one calendar entry.
The NRI version of the problem
NRIs assume TDS covers them, and often it nearly does — but the gaps are systematic. Tenants who don't withhold the required 30% on rent. Dividend TDS at 20% when your slab-plus-surcharge runs higher. Interest income across multiple NRO deposits. And in the year TDS falls short, 234B/234C interest runs from India while you're abroad. A once-a-year estimate in early March closes most of it.
Special cases worth knowing
- Presumptive taxpayers (Sections 44AD/44ADA — many consultants and small practices) can pay the whole year in one instalment by 15 March instead of four.
- The threshold: advance tax applies only if the year's liability net of TDS is ₹10,000 or more.
- Gains after 15 March can be paid by 31 March without instalment interest.
- Resident senior citizens without business income are exempt from advance tax entirely — the exemption does not extend to non-residents.
How to actually run this
Put three dates in the calendar — early June, early September, early December — plus the first week of March. At each, re-estimate the full-year picture in fifteen minutes: known salary and TDS, gains realised so far, anything signed but not closed. Pay the cumulative gap through the e-pay-tax portal (challan under "advance tax"). The March check matters most: it is the last chance to reach 90% and switch off 234B.
How Advisory Monks Consulting helps
Our Founders Tax and Pravasi desks run a quarterly checkpoint, re-size each instalment after big events, and keep you out of 234B/234C territory.
General information; confirm rates for your year.
This note is general guidance, not tax or legal advice. Positions depend on your specific facts — speak with a partner before acting.
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