Who is Liable to Pay Advance Tax?
The advance tax rules apply to any individual or entity whose total tax liability for the financial year is expected to be ₹10,000 or more. This applies after accounting for any Tax Deducted at Source (TDS). This includes salaried individuals who have
other sources of income not fully covered by their employer's TDS, such as rental income, capital gains, interest from fixed deposits, or freelance work. Self-employed professionals, freelancers, and business owners are also required to pay advance tax. The only key exemption is for resident senior citizens (aged 60 and above) who do not have any income from a business or profession; they are not required to pay advance tax.
The Instalment Schedule for FY 2026-27
The income tax law mandates that advance tax be paid in four instalments throughout the financial year. For the Financial Year 2026-27 (Assessment Year 2027-28), the deadlines and cumulative payment percentages are as follows:
By June 15, 2026: At least 15% of the total estimated tax.
By September 15, 2026: At least 45% of the total estimated tax.
By December 15, 2026: At least 75% of the total estimated tax.
By March 15, 2027: 100% of the total estimated tax.
It is important to note these percentages are cumulative. This means by September 15, your total payments for the year so far should equal 45% of your estimated annual tax liability.
How to Calculate Your Advance Tax Liability
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). This includes your salary, business profits, capital gains, rental income, and interest. Next, subtract any applicable deductions you plan to claim, such as those under Sections 80C, 80D, etc. Apply the relevant income tax slab rates to this net taxable income to arrive at your gross tax liability. From this amount, subtract any TDS that has been or will be deducted by your employer or clients. If the remaining tax payable is ₹10,000 or more, you are liable to pay advance tax on that amount.
Calculating the Second Instalment Amount
For the September 15 deadline, you must ensure that at least 45% of your total advance tax liability has been paid. To calculate the amount due for this second instalment, first determine 45% of your total estimated tax for the year. From this figure, subtract the amount you already paid in the first instalment by June 15. The remaining balance is what you need to pay on or before September 15 to meet the requirement. If your income has changed since your first estimate, you can revise your calculation and adjust the payment accordingly.
Penalties for Missing the Deadline
Failing to pay the advance tax instalments on time, or paying less than the required amount, attracts interest penalties. Interest under Section 234C of the Income Tax Act is levied at 1% per month for a period of three months on the shortfall amount for the September instalment. For instance, if you fall short of the 45% mark, interest will be charged on the deficit. Additionally, if your total advance tax paid by March 31, 2027, is less than 90% of your assessed tax, a further interest penalty under Section 234B at 1% per month is charged from April 1, 2027, until the date of payment.
How to Pay Your Advance Tax
The most convenient way to pay advance tax is online through the Income Tax Department's e-Pay Tax portal. You will need to use Challan ITNS 280. On the portal, you will be required to enter your PAN, select the Assessment Year (2027-28), and choose the 'Type of Payment' as '(100) Advance Tax'. You can then proceed to make the payment using net banking, a debit card, or other available online payment methods. After a successful transaction, you will receive a challan receipt with a Challan Identification Number (CIN), which serves as proof of payment.
