The third advance tax installment for the financial year 2025–26 was due on December 15, 2025. While a large number of taxpayers met the deadline, others
failed to make the payment on time. Missing this date can feel stressful, but it is not a compliance disaster. Still, it does come with a financial cost that taxpayers should clearly understand. Advance tax is meant to spread a taxpayer’s liability across the year, reducing the burden at the end of March. When one installment is skipped or underpaid, the Income Tax Act steps in with interest provisions rather than immediate penalties. No Penalty, But.. There is no direct fine or prosecution simply for missing the December advance tax installment. However, the law imposes interest for delayed or insufficient payment. This interest is charged under Section 234C of the Income Tax Act, 1961, which applies when the prescribed amount is not paid by the due date. The intent behind this provision is to compensate the government for delayed revenue, not to punish taxpayers outright. However, even a modest interest rate can add up over time. Understanding The Interest Cost If the December 15 deadline is missed, interest is levied at the rate of 1 per cent per month. This is calculated for a period of three months on the shortfall related to the December requirement, which expects taxpayers to have paid at least 75 per cent of their total advance tax liability by that point. Importantly, interest is charged only on the unpaid portion of tax, not on the full tax liability. This distinction can significantly reduce the actual cost for those who have already paid part of their dues earlier in the year. Can You Still Pay Later Without Extra Damage? Taxpayers who missed the December installment can still make good on their advance tax obligations by paying the remaining amount before March 15. If the total advance tax paid by that date meets the required threshold, the financial impact is largely limited to the interest on the delayed December portion. However, another provision comes into play at year-end. Section 234B applies if less than 90 per cent of the total tax liability has been paid by March 31. In such cases, interest at 1 per cent per month is charged on the outstanding balance starting from April 1 until full payment is made. What Taxpayers Should Do Now Those who missed the December deadline should calculate their remaining advance tax and aim to pay it before March 15. Acting promptly can help keep interest costs under control. Going forward, tracking advance tax due dates carefully can prevent unnecessary expenses and last-minute stress.
