Freelancers And Consultants: How To Pay Advance Tax In FY26 Without Errors

For freelancers and independent consultants, managing tax obligations isn't always straightforward. Without a fixed income, staying compliant with tax rules, especially advance tax, requires proactive planning. If you earn significant freelance income and are not covered by tax deducted at source, then understanding advance tax is important to avoid financial stress and penalties.

So, for those working independently. Let's find out how to navigate advance tax correctly in the financial year 2025–26.

Advance tax is income tax paid throughout the year in instalments, instead of a lump sum at the end of the financial year. It is essentially tax paid as you earn, with payments scheduled according to due dates set by the income tax department.

This system helps the government maintain cash flow and, more importantly, helps you manage your own finances better.

Unlike salaried professionals, whose taxes are deducted before they receive their pay, freelancers are their own tax managers. Your clients don't deduct TDS unless required, so it falls on you to estimate your income and plan tax payments accordingly.

The advantage of advance tax is that it distributes the tax burden across the year. This keeps your cash flow healthy and minimises the risk of a last-minute scramble.

Projecting income can be tricky when you don't earn a fixed salary. The first step is to estimate your total income for the year, based on contracts, repeat clients and income trends from previous years.

Depending on the nature and volume of your freelance work, you can choose from:

• Presumptive Taxation (Section 44ADA): Ideal for professionals with gross receipts up to Rs 75 lakh. You can declare 50% of your income as taxable and pay tax accordingly.

• Regular Taxation: If your business expenses are substantial, regular taxation allows you to deduct these from your total income. You will need to maintain books of accounts, but you might end up with a lower tax liability.

Evaluate both methods and opt for the one that saves you more in the long run.

Once you've estimated your net taxable income, compute the tax based on the applicable slab rates. Don't forget to include other incomes like interest or capital gains, and factor in tax-saving investments if any.

Once your estimated tax liability is in place, split it according to the due dates prescribed by the Income Tax Department:

• By June 15: 15% of total tax liability.

• By Sept. 15: 45% of total tax liability, minus any advance tax already paid.

• By Dec. 15: 75% of total tax liability, minus any advance tax already paid.

• By March 15: 100% of total tax liability, minus any advance tax already paid

Missing these deadlines or underpaying can lead to interest charges. So, set calendar reminders and review your income regularly for adjustments.