December Advance Tax Instalment: Estimating It From Your Sales Data
Published: 10/9/2026
Category: Tax
Businesses with tax liability above the threshold pay advance tax in instalments, with one due in mid-December. How to estimate this year's profit from your billing data, and avoid interest for underpayment.
If your business expects to owe income tax above the advance-tax threshold, the law expects you to pay it during the year in instalments, not all at the end. One instalment usually falls in mid-December, and paying too little can attract interest. You do not need perfect accounts to estimate it: your billing data for April to November gives a reasonable picture of the year. Businesses under presumptive taxation follow a simpler schedule; check with your CA.
Why this is worth 30 minutes
- Underpaying advance tax can lead to interest charges.
- A big tax bill in March squeezes cash flow at the busiest time of the year.
- Estimating profit mid-year often reveals problems early: rising costs, slow collections, falling margins.
A simple estimation method
- Sales so far: take April–November sales from your billing system.
- Project the year: add an estimate for December–March. Use last year's December–March sales as a guide, adjusted for this year's trend.
- Expenses: take purchases and expenses from April–November and project them the same way.
- Estimated profit: projected sales minus projected costs, adjusted for depreciation and non-deductible items (your CA will help).
- Estimated tax: apply your applicable tax rate to the estimated profit.
- Instalment due: compare the cumulative percentage due by the December date with what you have already paid, and pay the difference.
A worked example (illustrative)
| Amount |
|---|
| Sales April–November | ₹48 lakh |
| Projected sales December–March | ₹30 lakh |
| Projected annual sales | ₹78 lakh |
| Projected costs | ₹66 lakh |
| Estimated profit | ₹12 lakh |
Your CA converts estimated profit into tax using your status and rates, and tells you the cumulative amount due by each instalment date.
Common mistakes
- Ignoring festive season sales. October–November can be your biggest months; include them.
- Forgetting unpaid customer dues. For most businesses, profit counts sales when made, not when paid.
- Mixing personal and business expenses. It distorts the estimate and your books.
- Waiting for perfect numbers. A reasonable estimate on time beats a perfect one late.
How to pay
Advance tax is paid online through the Income Tax Department's e-filing portal using the correct challan and assessment year. Keep the challan details for your return.
Where BizFlow fits
BizFlow's reports give month-wise sales, purchases and expenses, which is all you need for a mid-year profit estimate. See AccountFlow and owner dashboards.
General information, not tax advice.
Frequently asked questions
Q: Do small businesses need to pay advance tax?
A: If estimated tax liability for the year is above the threshold, yes. Businesses under presumptive taxation follow a simplified schedule. Ask your CA.
Q: What if my estimate turns out wrong?
A: Later instalments can be adjusted. Interest may apply to shortfalls, so revise the estimate as the year progresses.
Sources
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