Advance Tax Payment FY 2026-27 — Schedule, Calculation, and Process

Advance tax is the requirement to pay tax during the fiscal year (not just at year-end) for those with estimated tax liability above ₹10,000. The schedule: 15% by June 15; 45% by September 15; 75% by December 15; 100% by March 15. Mandatory for: self-employed professionals, business owners, investors with substantial capital gains, and individuals with high non-salary income. For salaried employees with only salary income: TDS by employer covers obligation; advance tax not needed. For others, missing advance tax deadlines incurs interest at 1% per month under Section 234C on shortfall. For Indian middle-class professionals adding side income, freelancing, or rental, understanding advance tax prevents penalties at ITR filing. The annual cost of poor advance tax planning: 4-12% extra interest for those with significant tax liability. Freedomwise's ITR Filing FY 2026-27 Guide covers complete annual tax workflow.

What is the advance tax schedule for FY 2026-27?

Quarterly installments:

Due date	Cumulative %	Description
June 15, 2026	15%	First installment
September 15, 2026	45%	Second installment (additional 30%)
December 15, 2026	75%	Third installment (additional 30%)
March 15, 2027	100%	Final installment (additional 25%)

Practical timeline:

Installment	Payment due	Amount due
1st (15%)	Jun 15	15% of estimated tax
2nd (45%)	Sep 15	30% additional (now 45% paid)
3rd (75%)	Dec 15	30% additional (now 75% paid)
4th (100%)	Mar 15	25% additional (now 100% paid)

Self-assessment tax (any remaining shortfall): paid by ITR filing date (July 31 for non-audit cases).

Who needs to pay advance tax?

Eligibility criteria:

Required to pay advance tax:

• Estimated annual tax liability exceeds ₹10,000
• Income from non-salary sources (business, profession, rent, capital gains, interest, dividends)
• Self-employed professionals (doctors, lawyers, CAs)
• Business owners (proprietorship, LLP partner, etc.)
• HNIs with substantial investment income

Generally NOT required:

• Salaried employees with only salary income (TDS covers)
• Senior citizens (60+) without business/professional income (Section 207)
• Individuals with tax liability below ₹10,000

Boundary cases:

• Salaried with high rental income → advance tax needed if TDS by employer doesn't cover total liability
• Salaried with significant interest income → advance tax needed
• Salaried with major capital gains → advance tax for self-assessment portion

How do I calculate advance tax?

Calculation methodology:

Step 1: Estimate total income for FY.

• Salary (current run-rate)
• Business/professional income
• Capital gains (expected)
• Rental income
• Interest, dividends
• Other income

Step 2: Calculate gross tax liability.

• Apply slabs (new or old regime as chosen)
• Add cess (4%)
• Subtract rebate (87A) if applicable

Step 3: Subtract expected TDS.

• Employer TDS (estimated)
• Bank TDS (interest)
• Other TDS sources

Step 4: Remaining tax = Advance tax liability.

Worked example: Self-employed professional with ₹20 lakh annual income

• Estimated taxable income: ₹19.25 lakh (after ₹75K standard deduction)
• Tax under new regime: ₹2,93,000
• Add 4% cess: ₹11,720
• Total tax liability: ₹3,04,720
• Expected TDS: ₹50,000 (some clients deduct)
• Advance tax liability: ₹2,54,720

Installment payments:

Date	% Cumulative	Amount	Running paid
Jun 15	15%	₹38,208	₹38,208
Sep 15	45%	₹76,416 additional	₹1,14,624
Dec 15	75%	₹76,416 additional	₹1,91,040
Mar 15	100%	₹63,680 additional	₹2,54,720

How do I pay advance tax?

Payment process:

Step 1: Visit tax payment portal.

• incometax.gov.in → e-Pay Tax
• Or NSDL TIN payment portal (tin.nsdl.com)

Step 2: Select Challan 280.

• For individuals/non-corporate
• Choose "Advance Tax" head
• Assessment year 2027-28 (for FY 2026-27)

Step 3: Fill payment details.

• PAN (mandatory)
• Bank account
• Amount

Step 4: Make payment.

• Net banking
• Debit card
• Generate challan/receipt
• Save BSR code + challan number for ITR

Step 5: Record in ITR.

• Include in advance tax credit during filing
• Form 26AS automatically reflects payment

What is the penalty for missing advance tax?

Section 234C interest:

Calculation:

• 1% per month on shortfall amount
• For each installment that's not met
• Not annualized (so 1% × number of months delayed)

Worked example: ₹10 lakh tax liability, missed first 2 installments

• 15% required by Jun 15: ₹1.5 lakh
• 45% required by Sep 15: ₹4.5 lakh
• Both missed; paid by Sep 15 only ₹1 lakh

Section 234C interest:

• Shortfall from Jun 15: ₹1.5L - ₹0 = ₹1.5L (1% × 3 months = ₹4,500)
• Shortfall from Sep 15: ₹4.5L - ₹1L = ₹3.5L (1% × 3 months = ₹10,500)

Total 234C interest: ₹15,000

Section 234B interest (different):

• If total tax paid by March 31 is < 90% of liability
• 1% per month from April 1 to ITR filing
• Significant for procrastinators

How does Section 44AD presumptive taxation affect advance tax?

Special provision for small businesses:

Section 44AD eligibility:

• Business turnover ≤ ₹2 crore (₹3 crore if digital payments dominant)
• 8% of turnover deemed as income (6% if digital payments)
• Simplified compliance

Advance tax under 44AD:

• Pay 100% of advance tax by March 15 (not quarterly)
• Single payment vs four-installment schedule
• Simplified compliance

Section 44ADA for professionals:

• Specified professionals (doctors, lawyers, CAs, architects, etc.)
• Gross receipts ≤ ₹50 lakh
• 50% of gross receipts deemed as income
• Same single March 15 payment

Strategic consideration:

• If your business qualifies: presumptive taxation is simpler
• 100% by March 15 vs quarterly: depends on cash flow

What is the difference between advance tax and TDS?

Conceptual distinction:

Aspect	Advance tax	TDS
Paid by	Taxpayer	Deductor (employer/payer)
When	Quarterly installments	At source of income
Calculation	Estimated annual liability	Specific rate per income
Visible in	Bank statement, challan	Form 26AS
Adjustment	At ITR filing	At ITR filing

For salaried with no other income:

• TDS by employer = total tax liability
• No advance tax needed
• ITR filing reconciles

For self-employed/business:

• Limited TDS available (clients may deduct on payments)
• Most tax paid via advance tax
• Reconciliation in ITR

For hybrid (salaried + other income):

• Salary TDS by employer
• Other income: advance tax payments
• Combined coverage of total liability

How do I plan advance tax efficiently?

Strategic considerations:

1. Realistic income estimation.

• Better to slightly overestimate than underestimate
• Underestimation = 234C penalty
• Overpayment = refund (no penalty)

2. Quarterly income review.

• Track income vs initial estimate
• Adjust subsequent installments if needed
• Especially important for variable income (business)

3. Consider 87A rebate planning.

• If income < ₹12.75 lakh: rebate brings tax to zero
• May not need advance tax at all
• Apply rebate in calculation

4. Maintain payment records.

• Save all challans
• Cross-check with Form 26AS
• Essential for ITR reconciliation

5. Use accumulating bonus/income.

• Year-end bonus → use for final advance tax
• Sets up cleaner ITR filing
• Avoid scrambling at filing time

What are common advance tax mistakes?

Five errors:

1. Salaried thinking advance tax doesn't apply to them.

• True for salary only
• False when other income exists
• Capital gains, rent, interest = often needs advance tax

2. Underestimating annual income.

• Optimistic projection → 234C penalty
• Conservative estimation → small refund (no penalty)
• Better to slightly overestimate

3. Missing deadlines.

• Even 1-day delay triggers 1-month interest
• Set calendar reminders for Jun 15, Sep 15, Dec 15, Mar 15
• Pay 2-3 days before deadline

4. Wrong challan selection.

• Using regular tax challan (Challan 281) instead of self-assessment (Challan 280)
• Doesn't credit as advance tax
• Verify before payment

5. Not adjusting for actual TDS.

• Compute advance tax assuming no TDS
• Reality: significant TDS already deducted
• Pay double; refund delays

Use this on Freedomwise

• ITR Filing FY 2026-27 Guide — filing process
• TDS and TCS FY 2026-27 — TDS reference
• Capital Gains Tax FY 2026-27 — capital gains
• Old vs New Tax Regime FY 2026-27 — regime choice
• Tax pillar — complete tax education