Advance Tax 2026-27 — Due Dates, Instalments & Interest Under Income-tax Act, 2025

Last Updated: 15 April 2026  |  Applicable From: Tax Year 2026-27 (1 April 2026 onwards)  |  Reference: Income-tax Act, 2025 (30 of 2025), as amended by Finance Act, 2026

This guide is written for salaried employees who have income outside their salary, for business owners and professionals running proprietorships and LLPs, for presumptive taxpayers under Sec 44AD / 44ADA equivalents, for senior citizens wondering whether they must pay anything in advance, and for anyone who has had a capital gains windfall during the tax year. The Income-tax Act, 2025 (30 of 2025) received Presidential assent on 21 August 2025 and commences on 1 April 2026 as a single unconditional commencement. The advance tax machinery in Chapter XIX of the 2025 Act is carried forward substantially from the 1961 Act — four instalments, the ₹10,000 threshold, the ₹10,000 exemption for resident senior citizens without business income, the presumptive single-instalment rule, and the Sec 234B / 234C interest on shortfalls. What is new is the rate architecture under the new regime (basic exemption ₹4 lakh, rebate up to ₹12 lakh, slabs up to 30%) and the practical calculation of advance tax for taxpayers whose income is now within the nil-tax window under the default regime. This article works through the statutory framework, the due dates, the two interest provisions, the presumptive short cut, and four detailed worked examples — a salaried employee with interest income, a business owner with fluctuating revenue, a presumptive professional and a taxpayer with a mid-year capital gains windfall.

Table of Contents

1. Who is liable to pay advance tax
2. The ₹10,000 liability threshold
3. The four-instalment schedule for tax year 2026-27
4. Presumptive taxpayers — single-instalment rule
5. How to compute advance tax under the new regime
6. Sec 234B interest — shortfall below 90%
7. Sec 234C interest — instalment shortfalls
8. Capital gains windfall — safe harbour
9. How to pay — Challan ITNS 280 / e-Pay Tax
10. Worked example 1 — salaried with interest income
11. Worked example 2 — business owner
12. Worked example 3 — presumptive professional
13. Worked example 4 — capital gains windfall
14. Expert Insight
15. Key Takeaways
16. Frequently Asked Questions

1. Who is liable to pay advance tax

Every “assessee” (taxpayer) — individual, HUF, partnership firm, LLP, company, AOP, BOI, cooperative society — whose tax liability for the tax year, computed on the estimated total income and reduced by TDS / TCS / other prepaid credits, is likely to exceed ₹10,000 must pay advance tax. Two categories are exempt:

• Resident senior citizens (aged 60 or more at any time during the tax year) who do not have income chargeable under the head “Profits and Gains of Business or Profession” (PGBP). Such a senior citizen can hold salary/pension, house property, capital gains and other sources income of any magnitude and still not be liable to advance tax.
• Salaried taxpayers whose entire tax liability is covered by TDS under Sec 192 — i.e. the employer’s TDS is sufficient and there is no other material income.

Non-residents, partnership firms and companies have no exemption and must follow the standard four-instalment schedule. LLPs carrying on a business are also subject to the four-instalment schedule.

2. The ₹10,000 liability threshold

The threshold is applied on net tax liability after TDS, not on gross tax. The computation is:

• Estimate total income for the tax year under the applicable regime (default new regime or opted-out old regime)
• Compute tax on that total income under the regime’s slab structure, applying rebate under the Sec 87A equivalent (where available)
• Add surcharge (if income above ₹50 lakh) and 4% Health & Education Cess
• Reduce any TDS that the taxpayer expects to be deducted during the year
• Reduce any TCS and MAT/AMT credit available
• The balance is the advance tax obligation — if ₹10,000 or less, no advance tax is payable

3. The four-instalment schedule for tax year 2026-27

Instalment	Due Date	Cumulative % of total tax	Safe harbour
First	15 June 2026	15%	12% (no interest)
Second	15 September 2026	45%	36% (no interest)
Third	15 December 2026	75%	—
Fourth	15 March 2027	100%	—

If any due date falls on a Sunday or a declared holiday, the instalment may be paid on the next working day. The ₹10,000 threshold is applied once for the full tax year — not instalment by instalment.

4. Presumptive taxpayers — single-instalment rule

Taxpayers opting for the presumptive taxation regime under the Sec 44AD equivalent (eligible resident individuals, HUFs and partnership firms carrying on an “eligible business” with turnover up to ₹2 crore, or up to ₹3 crore where at least 95% of receipts are through banking/digital channels) or Sec 44ADA equivalent (specified professionals — legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration — with gross receipts up to ₹50 lakh, or up to ₹75 lakh where at least 95% of receipts are digital) must pay their entire advance tax liability in one instalment on or before 15 March 2027. They are not required to follow the 15 June / 15 September / 15 December schedule.

If a presumptive taxpayer fails to pay by 15 March, the shortfall attracts Sec 234C interest at 1% for one month, calculated on the entire unpaid amount.

5. How to compute advance tax under the new regime

The default regime for tax year 2026-27 is the new regime, with slabs up to 30% above ₹24 lakh. The rebate under the Sec 87A equivalent makes the total tax nil where total income does not exceed ₹12 lakh. For salaried employees, the ₹75,000 standard deduction further extends the effective nil-tax limit to ₹12.75 lakh. Where total income exceeds ₹12 lakh, the rebate is withdrawn but marginal relief applies so that the tax does not exceed the amount by which income exceeds ₹12 lakh.

Advance tax under the new regime for tax year 2026-27 slabs:

Total income	Rate
Up to ₹4,00,000	Nil
₹4,00,001 – ₹8,00,000	5%
₹8,00,001 – ₹12,00,000	10%
₹12,00,001 – ₹16,00,000	15%
₹16,00,001 – ₹20,00,000	20%
₹20,00,001 – ₹24,00,000	25%
Above ₹24,00,000	30%

Add 4% Health and Education Cess on (tax + surcharge). Surcharge applies above ₹50 lakh: 10% up to ₹1 crore, 15% up to ₹2 crore and 25% above ₹2 crore (the 37% rate is abolished in the new regime). LTCG at 12.5%, STCG on equity at 20% and other special-rate income are computed separately and are not eligible for the Sec 87A rebate.

6. Sec 234B interest — shortfall below 90%

Where the total advance tax paid during the tax year is less than 90% of the assessed tax (i.e. the tax finally determined on the return), Sec 234B equivalent interest is levied at 1% per month or part of a month on the difference between the assessed tax and the advance tax paid. The interest runs from 1 April immediately following the tax year till the date on which self-assessment tax is paid (or till regular assessment, whichever is earlier). The exposure is potentially large — a taxpayer who pays nothing in advance and pays everything only at return filing on 31 July will incur four months of 234B interest at 1% = 4%.

7. Sec 234C interest — instalment shortfalls

Sec 234C equivalent interest is levied instalment-by-instalment on the shortfall against the required cumulative percentage at each due date. The interest runs for three months on the first three instalments and for one month on the final instalment:

• 15 June: required 15%. If paid less than 12% → interest on the shortfall below 15% × 1% × 3 months.
• 15 September: required 45%. If paid less than 36% → interest on the shortfall below 45% × 1% × 3 months.
• 15 December: required 75%. Interest on any shortfall × 1% × 3 months.
• 15 March: required 100%. Interest on any shortfall × 1% × 1 month.

The 12% and 36% safe harbours protect honest first-timers from penalty interest if their estimate is a touch low. Sec 234B and Sec 234C can apply concurrently — one for the instalment shortfall, the other for the year-end deficit below 90%.

8. Capital gains windfall — safe harbour

Where a capital gain arises in the middle of the tax year and pushes up the total tax liability, the taxpayer is expected to include the tax on that gain in the instalments falling due on or after the date of accrual. There is no retrospective Sec 234C interest for the instalments that fell due before the gain arose. Similarly, winnings from lottery, crossword puzzles, card games or a first-time dividend are also shielded from 234C for earlier instalments. This is a critical safe harbour because most taxpayers cannot reasonably forecast a stock-sale gain in advance.

9. How to pay — Challan ITNS 280 / e-Pay Tax

Advance tax is paid on the e-Pay Tax facility on the income tax e-filing portal (which has replaced the older standalone Challan ITNS 280 form). Steps:

1. Log in to incometax.gov.in or go directly to e-Pay Tax under Quick Links.
2. Select “Income Tax” → “100 — Advance Tax” as the minor head.
3. Enter PAN, assessment year 2027-28 (old-style labelling still used on the portal as of April 2026), and the amount.
4. Pay via net banking, debit card, UPI, or RTGS/NEFT. The Challan Identification Number (CIN) is generated on success.
5. Retain the challan PDF — it flows into Form 26AS / AIS within 4–6 weeks and becomes the prepaid tax credit at return filing.

10. Worked example 1 — salaried with interest income

11. Worked example 2 — business owner with fluctuating revenue

12. Worked example 3 — presumptive professional

13. Worked example 4 — capital gains windfall

Related reading

• TDS Rate Chart 2026-27 — All Sections, Thresholds & Rates
• TCS Rates & Provisions 2026-27
• Income Tax Slabs Under the New Regime — Tax Year 2026-27
• ITR Filing Due Dates — Tax Year 2026-27
• Capital Gains Tax — Tax Year 2026-27 Rates and Rules
• Presumptive Taxation — Sec 44AD & 44ADA Under the 2025 Act

Expert Insight

Key Takeaways

• Advance tax applies under Chapter XIX of the Income-tax Act, 2025 from 1 April 2026, the first day of tax year 2026-27 under the new Act.
• The ₹10,000 threshold is applied on net tax after TDS — not on gross tax.
• Four instalments: 15% by 15 June 2026, 45% cum. by 15 September 2026, 75% cum. by 15 December 2026, 100% by 15 March 2027.
• Presumptive taxpayers (Sec 44AD / 44ADA equivalents): single instalment by 15 March 2027.
• Resident senior citizens (60+) with no business income are fully exempt.
• Sec 234B: 1% per month on shortfall below 90% of assessed tax, from 1 April following the tax year till self-assessment payment.
• Sec 234C: 1% per month × 3 months for instalments 1–3 and × 1 month for instalment 4, with 12% / 36% safe harbours at the first two instalments.
• Capital gains, lottery winnings, first-time dividend are safe-harboured from 234C for instalments before the accrual.
• The new regime rebate makes tax nil up to ₹12 lakh of slab income — many previously advance-tax payers now have zero obligation.
• Pay via the e-Pay Tax facility on the e-filing portal (successor to Challan ITNS 280) using the “100 — Advance Tax” minor head.

Frequently Asked Questions

Need help calculating advance tax, navigating instalment deadlines, or managing Sec 234B/234C interest exposure? Virtual Auditor supports salaried professionals with side-income, business owners, LLPs, and presumptive taxpayers with year-round tax planning. Call +91 99622 60333 or email support@virtualauditor.in.