What Exactly Is Advance Tax?
Advance tax is essentially paying your income tax in instalments throughout the financial year, rather than as a lump sum at the end. The core idea is to pay tax on income as it is earned. If your estimated total tax liability for the financial year (FY
2026-27) is ₹10,000 or more after accounting for any Tax Deducted at Source (TDS), you are required to pay advance tax. This applies to almost everyone—salaried individuals with other income, freelancers, and business owners. It ensures a steady flow of revenue for the government and prevents a heavy, one-time financial burden on taxpayers when they file their returns.
Who Is Liable to Pay Advance Tax?
The rule is simple: if your tax liability exceeds ₹10,000 for the year, you're on the hook. This often includes: Salaried employees who have significant additional income from other sources like rent, capital gains from stocks or property, or interest from fixed deposits which isn't fully covered by TDS. Freelancers, consultants, and self-employed professionals like doctors and lawyers, whose income doesn't have TDS deducted at source. Business owners and companies who are not under the presumptive taxation scheme. Even NRIs with taxable income in India are required to pay it. However, there is a key exemption: resident senior citizens (aged 60 and above) who do not have any income from a business or profession are exempt from paying advance tax.
The September 15 Deadline Explained
The Income Tax Department has set four deadlines for advance tax payments for the financial year 2026-27. September 15, 2026, is the due date for the second instalment. By this date, you must have paid at least 45% of your total estimated tax liability for the year. It's important to note this is a cumulative figure. If you already paid the first instalment of 15% by June 15, you only need to pay the remaining 30% by September 15 to reach the 45% minimum. The subsequent deadlines are December 15 (75% cumulative) and March 15 (100% cumulative). Taxpayers who have opted for the presumptive taxation scheme under sections 44AD or 44ADA have a different rule; they can pay their entire advance tax in a single instalment by March 15, 2027.
How to Calculate and Pay Your Instalment
Calculating your advance tax involves a few steps. First, estimate your total income from all sources for the entire financial year (April 1, 2026, to March 31, 2027). Next, subtract any applicable deductions (like those under Section 80C or 80D) to arrive at your net taxable income. Then, calculate the tax payable on this income based on the slab rates for your chosen tax regime. From this total tax amount, subtract any TDS that has already been deducted. If the remaining amount is over ₹10,000, that's your advance tax liability. For the September 15 deadline, ensure you have paid a total of 45% of this liability. Payment can be made online through the official income tax e-filing portal using Challan 280. You can use net banking, debit cards, or UPI for the payment.
What Happens If You Miss the Deadline?
Failing to pay the required instalment by the due date, or paying less than the mandated amount, attracts penal interest under Section 234C of the Income Tax Act. The interest is charged at 1% per month for a period of three months on the shortfall amount for the September instalment. For example, if you were supposed to pay a cumulative ₹45,000 by September 15 but only paid ₹30,000, interest will be charged on the ₹15,000 shortfall. Furthermore, if you fail to pay at least 90% of your total tax liability by the end of the financial year (March 31), you will be liable for an additional 1% monthly interest under Section 234B until the tax is fully paid.
