The third instalment of advance tax for the financial year 2025–26 (assessment year 2026–27) is due December 15. If your total tax liability for the year exceeds Rs 10,000, you are required to pay tax in advance in instalments.
“The 15 December advance-tax deadline is a crucial checkpoint, as by this date taxpayers must have paid at least 75 percent of their total estimated tax liability for the financial year. Missing this deadline attracts mandatory interest under Section 234C of the Income-tax Act, even if the balance tax is paid later while filing the return,” said Avnish Arora, executive director, direct tax, Forvis Mazars India.
Advance tax is payable by any person, salaried or non-salaried, whose estimated tax liability after adjusting for TDS is Rs 10,000 or more. While salaried individuals typically meet this obligation through monthly TDS, advance tax becomes necessary when TDS falls short.
Resident senior citizens aged 60 and above who do not have income from business or profession are exempt from paying advance tax.
How much advance tax should you have paid by now?
The income-tax department has set four deadlines for advance tax:
By June 15: 15 percent of estimated tax liability
By September 15: 45 percent of estimated tax liability
By December 15: 75 percent of estimated tax liability
By March 15: 100 percent of estimated tax liability
This deadline is particularly important for freelancers, investors and small business owners, as their income is often not subject to regular TDS.
“It is important to note that advance tax is payable on all kinds of income. Any remaining tax after adjusting advance tax, TDS and other credits is paid as self-assessment tax at the time of filing the return. However, delay in paying advance tax results in interest for deferment and shortfall and can also lead to a heavy lump-sum outgo at the time of filing," said Arora.
What happens if you miss today’s deadline?
If you fail to pay at least 75 percent of your estimated tax liability by December 15, interest under Section 234C is levied at 1 percent a month on the shortfall for three months, until March.
If you do not pay at least 90 percent of your total liability by March 31, interest under Section 234B will also apply at 1 percent a month until the tax is fully paid while filing your return.
Log into incometax.gov.in or use your net banking facility to deposit the third instalment of advance tax. Waiting until March will only inflate your tax outgo.
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