Advance Tax Payment Guide 2026 — Due Dates, Calculation, Penalty

Advance tax is the income tax you pay in instalments during the financial year, rather than as a lump sum at the end. If your estimated tax liability for FY 2026-27 exceeds ₹10,000, you must pay advance tax. Missing the deadlines attracts interest under Sections 234B and 234C.

Who Must Pay Advance Tax?

You must pay advance tax if your estimated net tax liability for the year exceeds ₹10,000 after deducting TDS.

Exceptions:

• Senior citizens (60+) with no business income are exempt from advance tax
• Salaried employees whose employer deducts TDS on full salary are generally exempt (but must pay if they have other income like capital gains, interest, or freelance income)

Advance Tax Due Dates for FY 2026-27

For Section 44AD/44ADA (presumptive taxation): Pay 100% by March 15, 2027. Quarterly instalments do not apply.

How to Calculate Advance Tax

Step 1: Estimate your total income for the year

• Salary (if any)
• Business/professional income
• Capital gains (if any)
• Interest income
• Rental income

Step 2: Deduct applicable deductions

• Standard deduction (₹75,000 new regime / ₹50,000 old regime)
• 80C, 80D, HRA, etc. (old regime only)

Step 3: Calculate tax on taxable income

• Apply the applicable tax regime (new or old)
• Add 4% Health & Education Cess

Step 4: Deduct TDS already deducted

• TDS by employer (from Form 16)
• TDS by bank (on FD interest)
• TDS by clients (on professional fees)

Step 5: The balance is your advance tax liability

Example:

• Estimated total income: ₹20,00,000
• Tax (new regime): ₹2,62,500 + cess = ₹2,73,000
• TDS by employer: ₹2,00,000
• Net advance tax: ₹73,000

Instalments:

• June 15: ₹10,950 (15%)
• September 15: ₹32,850 (45% cumulative)
• December 15: ₹54,750 (75% cumulative)
• March 15: ₹73,000 (100%)

How to Pay Advance Tax Online

1. Go to incometax.gov.in
2. Click e-Pay Tax (no login required)
3. Enter your PAN
4. Select Challan 280 (Income Tax on Companies / Other than Companies)
5. Select Advance Tax (100)
6. Enter the assessment year (2027-28 for FY 2026-27)
7. Enter the tax amount
8. Pay via net banking, UPI, or debit card

Save the challan receipt — you will need it when filing your ITR.

Penalty for Non-Payment of Advance Tax

Section 234B — Shortfall in Advance Tax

If you pay less than 90% of your total tax liability as advance tax, interest under Section 234B applies:

• Rate: 1% per month (simple interest)
• Period: From April 1 of the assessment year to the date of payment
• On: The shortfall amount

Example:

• Total tax: ₹1,00,000
• Advance tax paid: ₹80,000 (80% — less than 90%)
• Shortfall: ₹20,000
• Interest (6 months from April to September): ₹20,000 × 1% × 6 = ₹1,200

Section 234C — Deferment of Advance Tax

If you pay less than the required percentage by each due date, interest under Section 234C applies:

• Rate: 1% per month
• Period: 3 months for Q1, Q2, Q3; 1 month for Q4
• On: The shortfall for each instalment

Example:

• Required by June 15 (15%): ₹15,000
• Paid by June 15: ₹0
• Interest: ₹15,000 × 1% × 3 months = ₹450

Advance Tax for Capital Gains

Capital gains are often unpredictable — you may sell shares or property mid-year. The rules are:

• Capital gains arising before March 15: Include in the March 15 instalment
• Capital gains arising after March 15: Pay the full tax by March 31 (no interest under 234C)

This means if you sell property in February 2027, you must pay the full capital gains tax by March 15, 2027.

Advance Tax for Freelancers and Business Owners

If you are a freelancer or business owner under Section 44ADA/44AD:

• Pay 100% of advance tax by March 15, 2027
• No quarterly instalments required
• Interest under 234C does not apply for missing quarterly instalments

Frequently Asked Questions

What if I overpay advance tax?

The excess is refunded when you file your ITR. Refunds are credited to your bank account within 15-45 days of ITR processing.

Can I pay advance tax in one instalment?

Yes. You can pay the full amount by March 15. However, if you miss the quarterly deadlines, interest under Section 234C applies on the shortfall for each quarter.

Is advance tax applicable on salary income?

Generally no — your employer deducts TDS on salary. But if you have additional income (capital gains, freelance, interest) that results in a tax liability above ₹10,000 after TDS, you must pay advance tax on that additional income.

---

Use the free Advance Tax Calculator to compute your quarterly instalments. Or message me on WhatsApp if you need help with the calculation.