Advance Tax Due Dates 2026-27, Who Pays and Interest

Advance tax means paying income tax during the year in which you earn the income, in instalments, instead of in one go after the year ends. The third instalment for the current year falls on 15 December 2026, so this is a good time to check whether you are on track.

FY 2026-27 is the first year under the Income-tax Act, 2025, where it is called "tax year 2026-27". The income tax department's tax payments FAQ confirms that advance tax for this year arises and is paid under the new Act, and that "there are no policy changes" to advance tax: the dates, percentages, threshold and interest rates are the same as before, under new section numbers.

What are the advance tax due dates for FY 2026-27?

The due dates are 15 June 2026, 15 September 2026, 15 December 2026 and 15 March 2027. Section 408(1) of the Income-tax Act, 2025 sets out the instalments as cumulative minimum percentages of the advance tax for the year (text of the Act as passed by Parliament_Bill.pdf)):

Each instalment is the cumulative percentage less whatever you have already paid. Section 408(3) adds that any amount paid by 31 March 2027 still counts as advance tax for the year, although interest for missing 15 March may already have started.

The instalment for FY 2025-26 that fell due on 15 March 2026 belongs to the old law. The department's FAQ says the Income-tax Act, 1961 governs that payment and any interest on shortfalls for that year, under sections 234B and 234C of the old Act.

Who has to pay advance tax?

Every taxpayer whose tax for the year, after TDS and TCS, is ₹10,000 or more must pay advance tax. That threshold is in section 404 of the 2025 Act, and the department's FAQ notes it is unchanged from the old Act. It covers individuals, Hindu undivided families, firms, LLPs and companies, residents and non-residents alike.

In practice, the people caught by it are:

• business owners and professionals, including partners in firms;
• companies and LLPs, which usually cross the threshold if they make a profit;
• salaried people with significant other income, such as rent, interest, capital gains or freelance fees. The department's ITR FAQ points out that for employees the employer's TDS usually covers salary, but other income increases the tax due.

Who does not have to pay advance tax?

Two groups are outside the instalment system:

1. Anyone whose tax for the year, after TDS and TCS, is below ₹10,000. They pay any balance as self-assessment tax before filing the return.
2. Resident senior citizens without business income. Section 403(3) exempts an individual resident in India who is 60 or older at any time during the tax year and has no income under the head "Profits and gains of business or profession". A retired person living on pension, rent and interest is covered; a 65-year-old consultant with professional fees is not.

How is advance tax calculated?

Advance tax is the tax on your estimated income for the whole year, less the TDS and TCS that will be deducted or collected on that income. Section 405 of the 2025 Act puts this as a formula:

Advance tax payable = tax on estimated current income at the rates in force − TDS and TCS on that income

A practical way to work it out:

1. Estimate the year's income under every head: salary, house property, business or profession, capital gains already realised, and other sources such as interest.
2. Apply the slab rates of the regime you will use, and add surcharge and cess if they apply.
3. Subtract the TDS and TCS already deducted or collected, or expected to be, on that income.
4. If the balance is ₹10,000 or more, pay it in the instalments above.

Section 406(2) lets you raise or lower the later instalments as your estimate changes, so a December review of the first eight months' figures is worth doing before paying the third instalment.

When does a presumptive-scheme business pay advance tax?

A business or professional using the presumptive scheme pays the whole advance tax in one instalment by 15 March. Section 408(2) applies this to assessees who declare income under section 58(2), Table serial numbers 1 and 3 of the 2025 Act. The department's FAQ on the new Act explains that section 58 brings together the old presumptive schemes for business (section 44AD), professions (section 44ADA) and goods carriages (section 44AE).

Serial number 1 is the old section 44AD scheme and serial number 3 is the old section 44ADA scheme. The single-instalment rule does not cover goods carriage operators (serial number 2, old section 44AE). The department's ITR-4 FAQ says there is no advance tax concession for them, so they follow the four-instalment schedule.

What interest is charged if advance tax is paid late or short?

Two kinds of interest apply, and the tax payments FAQ confirms that both rates are unchanged under the 2025 Act.

Under section 424, "assessed tax" means the tax on your total income less TDS, TCS and certain reliefs and tax credits. If you pay less than 90% of it by 31 March, interest runs on the whole shortfall, not just the part below 90%.

Under section 425, the shortfall is measured against the tax due on the income you finally declare in your return. Two concessions apply:

• no interest is charged for the June instalment if you paid at least 12% of the tax by 15 June, or for the September instalment if you paid at least 36% by 15 September (section 425(2));
• no interest is charged where the shortfall comes from capital gains, dividends, business income arising for the first time or certain other income that could not be foreseen, provided the tax on it is paid in the remaining instalments or by 31 March (section 425(4)).

Presumptive-scheme taxpayers pay interest of 1% on any shortfall at 15 March under section 425(3).

The Finance Bill, 2026 made only consequential changes to sections 424 and 425, updating references to the minimum alternate tax credit (Finance Bill, 2026, clauses 81 and 82).

How much interest does a missed December instalment cost?

The deferment interest on a short December instalment is 3% of the shortfall. Take a taxpayer whose tax due on returned income, after TDS, comes to ₹1,00,000:

Interest is ₹450 before any rounding. Because the full ₹1,00,000 was paid by 31 March, more than 90% of the assessed tax, there is no section 424 interest. Had the taxpayer paid only ₹80,000 by 31 March, section 424 interest of 1% a month would run on the ₹20,000 shortfall from 1 April 2027 until it was paid.

How do you pay advance tax?

Advance tax is paid through authorised banking channels, including electronic payment, and the tax payments FAQ says the modes of payment have not changed under the new Act. The detail that matters this year is the period you select. For advance tax on income earned from April 2026 to March 2027, choose Tax Year 2026-27. Payments for FY 2025-26, such as self-assessment tax, still go under AY 2026-27. Picking the wrong one means the credit lands in the wrong year.

Keep the challan details: advance tax is credited against your final liability for the year under section 410, and you will need them when you file the return.

What should you do before 15 December 2026?

Review your income for April to November, project it to March, and check that at least 75% of the year's tax will have been paid by 15 December 2026. Companies and firms should rerun their estimate from their management accounts; good books of account make this quick. Individuals should look at capital gains, rent and interest that TDS does not fully cover.

If you also have a return still open for FY 2025-26, the last date for a belated or revised return is 31 December 2026, and the year-end tasks for a new company are in our compliance checklist for a new private limited company. KNAP Advisory works out advance tax estimates and quarterly instalments as part of our income tax return filing service.

Frequently asked questions

What is the last date for the third instalment of advance tax?

The third instalment for tax year 2026-27 is due on or before 15 December 2026. By that date at least 75% of the year's advance tax should have been paid, counting the June and September instalments. The fourth and final instalment is due by 15 March 2027.

What percentage of advance tax is due by 15 December?

At least 75% of the estimated advance tax for the year must be paid by 15 December, as a cumulative figure. If you paid 45% by 15 September, the December instalment is the remaining 30%. Paying less attracts interest of 3% on the shortfall under section 425 of the Income-tax Act, 2025, the old section 234C.

Do salaried employees need to pay advance tax?

Usually not on salary, because the employer deducts TDS on it every month. A salaried person must still pay advance tax if other income, such as rent, interest, capital gains or freelance fees, leaves tax of ₹10,000 or more uncovered by TDS for the year.

Are senior citizens exempt from advance tax?

A resident individual aged 60 or more at any time during the tax year is exempt if they have no income from business or profession, under section 403(3) of the Income-tax Act, 2025. They pay any tax due as self-assessment tax before filing. A senior citizen who earns business or professional income must pay advance tax like anyone else.

What is the minimum tax liability for paying advance tax?

Advance tax applies only when the tax payable for the year, after deducting TDS and TCS, is ₹10,000 or more. This threshold is in section 404 of the Income-tax Act, 2025 and is the same as under the old Act. Below it, you simply pay the balance as self-assessment tax before filing the return.

Do companies follow the same advance tax schedule as individuals?

Yes. Section 408(1) applies the same four instalments to every assessee liable to advance tax, including companies, LLPs and firms: 15% by 15 June, 45% by 15 September, 75% by 15 December and 100% by 15 March. A company estimates its taxable profit for the year and pays tax on it in these instalments, less any TDS on its receipts.

Is advance tax payable on capital gains?

Yes, tax on capital gains counts towards advance tax. Because a gain cannot be predicted, section 425(4) waives deferment interest on a shortfall caused by capital gains, provided the tax on the gain is paid in the remaining instalments, or by 31 March if the gain arises after 15 March. Pay it in the next instalment after the sale.

Does the 44AD presumptive scheme require advance tax?

Yes, but in one instalment. Businesses that used section 44AD, and professionals that used section 44ADA, now declare income under section 58 of the Income-tax Act, 2025 and must pay the whole advance tax by 15 March under section 408(2). A shortfall on that date attracts 1% interest under section 425(3).

What happens if I do not pay advance tax at all?

You will owe interest under both sections when you file. Section 425 (old 234C) charges deferment interest on each missed instalment, and section 424 (old 234B) charges 1% a month on the unpaid tax from 1 April after the tax year until you pay. The tax itself still has to be paid as self-assessment tax before the return is filed.

What is the difference between section 234B and section 234C interest?

Section 234B, now section 424, applies when the advance tax paid by 31 March is less than 90% of the assessed tax, and runs at 1% a month from 1 April. Section 234C, now section 425, penalises paying individual instalments late or short, at 3% for each of the first three instalments and 1% for the last. Both can apply in the same year.

Can advance tax be paid after 15 March?

Yes. Section 408(3) treats any amount paid on or before 31 March as advance tax for that financial year. Paying between 16 and 31 March still attracts 1% deferment interest on the March shortfall, but it can keep you above the 90% mark and avoid section 424 interest. Tax paid after 31 March is self-assessment tax.

Can I pay the whole year's advance tax in one instalment?

Yes, paying early is always allowed and avoids deferment interest, because each due date sets only a minimum cumulative amount. Only presumptive-scheme taxpayers are allowed to wait until 15 March without interest.

Which year should I select when paying advance tax for FY 2026-27?

Select Tax Year 2026-27 when paying advance tax on income earned from 1 April 2026 to 31 March 2027. The income tax department asks taxpayers to choose AY 2026-27 only for payments relating to FY 2025-26, such as self-assessment tax, so that each payment is credited to the correct year.

What if I pay more advance tax than I owe?

The excess is not lost. Advance tax is credited against your final tax for the year under section 410 of the Income-tax Act, 2025, and anything paid over the final liability is claimed as a refund in the income tax return. You can also lower your later instalments under section 406(2) once you see your estimate falling.

Do non-resident Indians have to pay advance tax?

Yes, if their tax payable in India after TDS is ₹10,000 or more. The senior citizen exemption in section 403(3) covers residents only. In practice, much of the Indian income of non-residents, such as interest on NRO deposits or rent, suffers TDS, so the balance is often below the threshold, but capital gains and business income can push it over.

Which Act governs advance tax paid in March 2026?

The Income-tax Act, 1961. The department's FAQ explains that advance tax is linked to the year in which the income is earned, so the instalment due on 15 March 2026 for FY 2025-26 falls under the old Act, and any interest for shortfalls in that year is charged under sections 234B and 234C, even if it is levied after 1 April 2026.

How KNAP Advisory can help

• Income Tax Return (ITR) Filing