Advance Tax is a mechanism under the Income-tax Act, 1961 that requires taxpayers to pay their estimated tax liability in installments during the financial year instead of paying the entire tax amount at the time of filing the Income Tax Return (ITR). This system is commonly known as the "Pay as You Earn" scheme.
Advance tax provisions apply to individuals, professionals, freelancers, businesses, LLPs, and companies whose estimated tax liability exceeds the prescribed threshold. Failure to pay advance tax or delayed payment may attract interest under Sections 234B and 234C of the Income-tax Act.
This article explains the advance tax due dates for FY 2026-27, applicability, computation, and the consequences of non-compliance.
Advance Tax refers to the income tax payable in installments during the financial year based on estimated income.
Instead of paying the entire tax liability after the end of the year, taxpayers are required to deposit tax periodically as income is earned.
Advance tax is generally payable if the total tax liability for the financial year is ₹10,000 or more after considering:
Applicable to:
Resident senior citizens (aged 60 years or above) who do not have income from business or profession are generally exempt from payment of advance tax.
| Due Date | Minimum Cumulative Advance Tax Payable |
|---|---|
| 15 June 2026 | 15% of total tax liability |
| 15 September 2026 | 45% of total tax liability |
| 15 December 2026 | 75% of total tax liability |
| 15 March 2027 | 100% of total tax liability |
Suppose a taxpayer estimates total tax liability of ₹1,00,000 for FY 2026-27.
| Due Date | Cumulative Amount Payable |
| 15 June | ₹15,000 |
| 15 September | ₹45,000 |
| 15 December | ₹75,000 |
| 15 March | ₹1,00,000 |
Eligible businesses opting for presumptive taxation under Section 44AD are generally required to pay:
instead of quarterly installments.
Professionals opting for presumptive taxation under Section 44ADA are also generally required to pay:
Estimate total income from:
Calculate tax liability as per applicable tax regime.
Deduct:
Pay the balance tax as per the prescribed installment schedule.
Section 234C imposes interest for deferment of advance tax installments.
If the taxpayer fails to pay the required percentage of advance tax by the specified due dates, interest may be levied.
| Due Date | Required Payment |
| 15 June | 15% |
| 15 September | 45% |
| 15 December | 75% |
| 15 March | 100% |
If the required installment is not paid, interest under Section 234C is generally charged at:
for the prescribed period on the shortfall amount.
Suppose:
Shortfall = ₹20,000
Interest may be levied at 1% per month on the shortfall for the applicable period.
Section 234B applies when:
Interest is generally charged at:
from 1 April of the assessment year until payment of tax.
Suppose:
Since less than 90% of assessed tax has been paid, interest under Section 234B may become applicable on the shortfall.
Failure to pay advance tax may result in:
Review income periodically and revise tax estimates.
Capital gains may significantly increase tax liability during the year.
Business owners and professionals should regularly review profitability.
Ensure proper reflection of TDS in Form 26AS and AIS.
Timely payment helps avoid unnecessary interest costs.
Many taxpayers assume tax can be paid only at the time of filing the return.
Incorrect projections often lead to interest liability.
Sudden sale of shares, mutual funds, or property may increase tax liability.
Missing due dates attracts interest even if the tax is ultimately paid.
Advance tax is an important compliance requirement under the Income-tax Act. Taxpayers with an estimated tax liability of ₹10,000 or more should carefully monitor their income and pay taxes according to the prescribed schedule. Timely payment helps avoid interest under Sections 234B and 234C, improves cash flow planning, and ensures smooth tax compliance.