Advance Tax Q3 Due December 15, 2026: Who Must Pay and How to Compute It (FY 2026-27)

The second advance tax instalment deadline — September 15 — passed about 25 days ago. If you have been paying along, you should have reached 45% of your estimated FY 2026-27 tax liability by now. If you skipped it, underpaid it, or never realised you owed it, the next milestone is what matters: December 15, 2026, when cumulative payments must reach 75% — about 9 weeks from now. Quick Answer: What is advance tax and who has to pay it? Advance tax is income tax you pay in instalments during the financial year instead of one lump sum when filing your return. For FY 2026-27, anyone whose tax liability exceeds ₹10,000 after TDS/TCS must pay it: 15% by June 15, 45% by September 15, 75% by December 15, and 100% by March 15. Shortfalls attract interest.

What advance tax is — and the ₹10,000 trigger

The logic is "pay as you earn": instead of settling everything when you file your return, you spread your estimated tax across the year. It is not an extra tax — every rupee paid is credited to you at filing time. The trigger: if your total tax liability for FY 2026-27, after subtracting all TDS and TCS, is ₹10,000 or more, you must pay advance tax. Below that, you simply settle the balance with your return. This applies to individuals, professionals, business owners, and salaried people alike.

The FY 2026-27 schedule: 15–45–75–100 (cumulative)

For regular taxpayers, each deadline asks for a running total — not a fresh slice: - June 15, 2026 — 15% of estimated annual tax (past) - September 15, 2026 — 45% cumulative (past) - December 15, 2026 — 75% cumulative (next deadline) - March 15, 2027 — 100%, clearing the full liability On a ₹1,00,000 estimated liability: ₹15,000 by June, ₹45,000 total by September, ₹75,000 total by December, and the final ₹25,000 by March. Where things stand today, October 10: two instalments behind, two ahead. If you missed September, you can still make up the shortfall now — with interest on the gap (explained below).

Who must pay — and who is exempt

Salaried employees: salary TDS usually covers you — unless you also earn bank interest, rent, freelance income, or capital gains that TDS does not fully cover. When the leftover tax (total liability minus all TDS) crosses ₹10,000, advance tax applies. Freelancers and professionals: clients rarely deduct TDS on your receipts, so most of your estimated tax is payable as advance tax. The exception: those under the 44ADA presumptive scheme pay a single 100% instalment on or before March 15 — no quarterly payments needed. The same concession applies to 44AD businesses. Senior citizens: a clear carve-out — resident individuals aged 60+ with no business or professional income are fully exempt from advance tax, even above ₹10,000. They settle when filing. Any business or professional income removes the exemption.

How to compute it: four steps

1. Estimate total income for FY 2026-27 (salary, business, interest, rent, capital gains). 2. Apply your chosen regime and deductions, compute tax at slab rates, and add the 4% health and education cess. 3. Subtract all TDS and TCS already deducted. 4. If the balance is ₹10,000 or more, that is your advance tax — apply the 15–45–75–100 percentages, revising your estimate each quarter as income changes.

Worked example 1: freelancer with ₹12 lakh receipts under 44ADA

A freelance designer opts for 44ADA, where 50% of receipts are deemed income: ₹12 lakh × 50% = ₹6 lakh taxable income. Under the new regime: first ₹4 lakh nil, 5% on the ₹2 lakh above it = ₹10,000, plus 4% cess (₹400) = ₹10,400 total. With nil TDS, the full ₹10,400 is advance tax — just over the ₹10,000 threshold. Under 44ADA she pays it as one instalment of ₹10,400 by March 15, 2027. No quarterly payments.

Worked example 2: salaried person with ₹2 lakh of FD interest

A salaried employee already in the 30% slab holds FDs earning ₹2 lakh of interest. The bank deducts 10% TDS = ₹20,000. But actual tax at 30%: ₹60,000 + 4% cess (₹2,400) = ₹62,400. Shortfall: ₹42,400 payable as advance tax — her schedule: ₹6,360 by June 15, ₹19,080 cumulative by September 15, ₹31,800 cumulative by December 15, ₹42,400 by March 15. This is the trap many salaried taxpayers walk into: perfect salary TDS, but side income creates an interest-bearing shortfall.

Capital gains: pay in the quarter they arise

Unpredictable income — capital gains, windfalls — is treated practically: compute the tax when the gain actually arises and pay it in the remaining instalments. A gain booked in November 2026 flows into the December 15 and March 15 instalments; gains from January–March are covered by March 15. You are never expected to predict gains you did not know you would earn.

The cost of missing: 234B and 234C interest

No fine or penalty notice follows a missed instalment — but interest does, under two provisions. 234C — deferring an instalment: 1% per month on the shortfall at each deadline — 3 months for June, September, and December shortfalls, 1 month for March. Part of a month counts as a full month, so even a few days' delay can cost a full month. Small cushion: no 234C for June/September if you paid at least 12% and 36% (vs the 15%/45% targets). No cushion for December or March. 234B — underpaying the year: if by March 31 you have paid less than 90% of your total assessed tax, interest runs at 1% per month on the shortfall from April 1 until you actually pay — usually at filing. Because it compounds month after month, 234B is the expensive one. Both provisions can apply simultaneously. The practical message: December 15 locks in 75%; a shortfall there costs 3 months of 234C — and risks 234B joining in.

How to pay: e-pay tax in six steps

1. Go to incometax.gov.in → e-Pay Tax (Quick Links; PAN + OTP works without a full login). 2. Select the Income Tax tile and proceed. 3. Choose the correct year for income earned in FY 2026-27 — the updated portal labels it "Tax Year 2026-27"; some guidance still says Assessment Year 2027-28. Verify the on-screen label. 4. Select Minor Head 100 — Advance Tax (digital Challan 280). Not 300 (self-assessment, paid at filing) or 400 (regular assessment). 5. Enter amounts under tax, surcharge (if applicable), cess, and interest if short. 6. Pay via net banking, debit card, UPI, or NEFT/RTGS — and save the challan (BSR code + serial number) for your return.

A note on the new Income-tax Act 2025

FY 2026-27 is the first year under the new Income-tax Act 2025. Some publishers report renumbered sections (234B → 424, 234C → 425). However, Income Tax Department material published in 2026 still refers to Sections 234B and 234C, so this article uses the numbers official and portal references most widely carry. Dates, percentages, thresholds, and interest rates are unaffected either way. Sources: CNBC TV18 (Sep 2026); Business Today (Sep 8, 2026); ABP Live (Sep 13, 2026); Income Tax Department, Ministry of Finance, "Interest and Fees under the Income-tax Act" (Jan 2026); taxbuddy.com (2026); CAclubIndia (Sep 15, 2026); tax2win.in (2026). This article is for educational purposes only and is not financial advice. Please consult a SEBI-registered investment adviser for personalized guidance. Investments are subject to market risk.