What is Advance Tax?
Advance tax is an income tax paid during a financial year rather than as a lump sum at the end. Often called a 'pay-as-you-earn' tax, it ensures a steady flow of revenue for the government and prevents a heavy financial burden on taxpayers during return
filing. Under Section 208 of the Income Tax Act, if your estimated tax liability for the year exceeds ₹10,000 after accounting for Tax Deducted at Source (TDS), you are required to pay advance tax.
Who is Liable to Pay?
The requirement to pay advance tax applies to a wide range of taxpayers, including salaried individuals, freelancers, professionals, and business owners. Even if your employer deducts TDS from your salary, you may still need to pay advance tax on other income, such as capital gains, rental income, dividends, or interest. However, there is an exemption for resident senior citizens (aged 60 or above) who do not have any income from a business or profession.
Key Deadlines for FY 2026-27
Advance tax is paid in four instalments throughout the financial year. For the Financial Year 2026-27 (Assessment Year 2027-28), the deadlines are crucial. The second instalment is due on September 15, 2026. By this date, a cumulative total of 45% of your total estimated tax liability for the year should be paid. The full schedule is as follows:
By June 15, 2026: 15% of total estimated tax
By September 15, 2026: 45% of total estimated tax
By December 15, 2026: 75% of total estimated tax
By March 15, 2027: 100% of total estimated tax
It's important to note these percentages are cumulative. For the September deadline, you must ensure your total payments for the year so far add up to 45% of your liability.
How to Calculate Your Second Instalment
Calculating your advance tax involves a few straightforward steps. First, estimate your total income from all sources for the entire financial year (April 1, 2026, to March 31, 2027). Next, calculate your total tax liability on this estimated income based on the applicable tax slab rates. From this total tax amount, subtract any TDS that has already been deducted or will be deducted during the year. If the remaining amount is over ₹10,000, that is your advance tax liability. To determine the amount for the second instalment, calculate 45% of this total advance tax liability and then subtract the amount you already paid for the first instalment in June.
A Step-by-Step Guide to Online Payment
Paying your advance tax online is a simple process through the official income tax e-filing portal.
1. Visit the Portal: Go to the official income tax e-filing website (incometax.gov.in) and click on 'e-Pay Tax' under the Quick Links section.
2. Enter Details: Input your PAN, re-confirm it, and enter your mobile number to receive an OTP for verification.
3. Select Payment Type: After OTP verification, you will be taken to a new page. Click 'Proceed' on the 'Income Tax' option.
4. Choose Assessment Year and Payment Head: Select the Assessment Year (AY) as 2027-28 and the 'Type of Payment' as 'Advance Tax (100)'.
5. Enter Tax Amount: Fill in the tax details in the relevant fields like 'Tax', 'Surcharge', and 'Cess'.
6. Select Payment Method: Choose your preferred mode of payment from options like Net Banking, Debit Card, UPI, or Payment Gateway.
7. Complete Payment: You will be redirected to your bank's portal to complete the transaction. After successful payment, a challan receipt will be generated. Download and save this challan, as it contains important details like the BSR code and challan number required for filing your ITR.
What if You Miss the Deadline?
Failing to pay advance tax or underpaying an instalment comes with financial consequences. The Income Tax Act levies interest under two key sections. Interest under Section 234C is charged at 1% per month for a period of three months on the shortfall amount for each quarterly instalment. Additionally, if you fail to pay at least 90% of your total assessed tax by the end of the financial year (March 31), interest under Section 234B at 1% per month will be levied on the deficit from April 1 of the assessment year until the date of payment.
