Advance Tax Payment Guide for FY 2026-27: Due Dates, Calculation, and How to Avoid Interest

Advance tax is the mechanism by which the Income Tax Department collects tax during the financial year itself, rather than waiting until you file your return. If your estimated tax liability for the year exceeds ₹10,000 (after TDS), you are required to pay advance tax in four instalments.

Failing to pay advance tax — or paying less than required — results in interest charges under Sections 234B and 234C. These interest charges are not penalties; they are mandatory and cannot be waived. Understanding the system and paying on time is the only way to avoid them.

Advance tax applies to:

• Individuals, HUFs, firms, companies, and all other taxpayers
• Whose estimated tax liability for the year exceeds ₹10,000 after deducting TDS

Exemptions:

• Senior citizens (age 60 or above) with no business income — exempt from advance tax. They pay all tax as self-assessment tax when filing their return.
• Taxpayers whose entire income is subject to TDS and TDS covers the full liability — no advance tax required.

For taxpayers under presumptive taxation (Section 44AD / 44ADA): Only one instalment — 100% by March 15, 2027.

Include all sources:

• Salary (gross, before standard deduction)
• Business or professional income (estimated)
• Capital gains (if any — see special rules below)
• House property income (rental income minus 30% standard deduction and home loan interest)
• Other sources (interest, dividends, etc.)

Subtract:

• Standard deduction (₹75,000 for salaried individuals under new regime; ₹50,000 under old regime)
• Chapter VI-A deductions (80C, 80D, etc.) if you are on the old regime
• Any other eligible deductions

Apply the applicable tax slabs (new regime or old regime) to your taxable income. Add surcharge (if applicable) and 4% health and education cess.

Subtract the TDS that has been or will be deducted from your income during the year (salary TDS, TDS on interest, TDS on rent, etc.).

If the result exceeds ₹10,000, you must pay advance tax in the prescribed instalments.

Scenario: A self-employed consultant with estimated income of ₹18 lakh for FY 2026-27, under the new tax regime.

Instalment schedule:

Capital gains are often unpredictable — you may sell a property or shares mid-year without having planned for it. The Income Tax Act has a special provision:

If capital gains arise after the due date of an instalment:

• The entire capital gains tax can be included in the next instalment (or the final instalment if it arises after December 15)
• No interest under Section 234C is charged for the earlier instalments that did not include the capital gains

Example: If you sell a property in November 2026 and realise a capital gain, you can include the full capital gains tax in the December 15 instalment without any interest for the June and September instalments.

Interest under Section 234C is charged when you pay less than the required cumulative percentage by each instalment due date.

Rate: 1% per month (simple interest) for 3 months for each instalment shortfall.

Example: If you should have paid ₹41,850 by September 15 but paid only ₹20,000, the shortfall is ₹21,850. Interest = 1% × 3 × ₹21,850 = ₹655.

Section 234B applies when the total advance tax paid is less than 90% of the assessed tax by March 31.

Rate: 1% per month (simple interest) from April 1 until the date of payment of self-assessment tax.

Example: If your total tax liability is ₹2,73,000 and you paid only ₹2,00,000 in advance tax (73%), you have defaulted under Section 234B. Interest runs from April 1, 2027 until you pay the balance.

1. Go to the Income Tax e-filing portal (incometax.gov.in)
2. Navigate to e-Pay Tax (or use the NSDL/Protean portal)
3. Select Challan 280 (Income Tax on Companies / Other than Companies)
4. Select Advance Tax (Code 100)
5. Enter your PAN, assessment year (2027-28 for FY 2026-27), and the amount
6. Pay via net banking, debit card, or UPI
7. Save the challan receipt — you will need the BSR code and challan serial number when filing your ITR

Advance tax can also be paid at designated bank branches using a physical Challan 280. However, online payment is faster and provides instant confirmation.

Advance tax for FY 2026-27 must be paid under Assessment Year 2027-28. Using the wrong AY means the payment is not credited to the correct year.

Many taxpayers underestimate their income, especially if they have variable business income. It is better to slightly overestimate and pay a little more — excess advance tax is refunded with interest at 6% per annum.

Before calculating advance tax, collect all TDS certificates (Form 16, Form 16A) and verify the TDS amounts on the income tax portal (Form 26AS / AIS). Unclaimed TDS can significantly reduce your advance tax liability.

If you have sold property, shares, or mutual funds during the year, include the capital gains in your advance tax calculation. Many taxpayers forget this and face a large tax bill at filing time.

The final instalment on March 15 is critical. Any shortfall after March 15 attracts Section 234B interest from April 1. Pay the full balance by March 15 to avoid this.

If you are a salaried employee whose employer deducts TDS on salary, you may still need to pay advance tax if you have:

• Significant interest income not subject to TDS
• Rental income
• Capital gains
• Freelance or consulting income
• Dividend income above ₹5,000 (TDS is deducted at 10% above ₹5,000, but your marginal rate may be higher)

Calculate your total tax liability including all sources, subtract the TDS your employer will deduct, and pay advance tax on the balance if it exceeds ₹10,000.

If you have opted for the presumptive taxation scheme under Section 44AD (8% or 6% of turnover for businesses) or Section 44ADA (50% of gross receipts for professionals), you are required to pay 100% of your advance tax in a single instalment by March 15.

You do not need to pay in four instalments. However, if you miss the March 15 deadline, Section 234B interest applies from April 1.

If you have paid more advance tax than your actual tax liability (which happens when income is lower than estimated, or TDS is higher than expected), you are entitled to a refund.

The refund is processed after you file your ITR. The Income Tax Department pays interest on refunds at 6% per annum from April 1 of the assessment year to the date of refund (subject to certain conditions).

Our tax planning team helps clients:

• Estimate annual income and calculate advance tax liability
• Structure payments across the four instalments
• Monitor TDS credits and adjust advance tax accordingly
• File ITR and claim refunds efficiently

Contact us for a personalised advance tax calculation for FY 2026-27.