Advance Tax 2026-27: Who Pays, Due Dates and Computation (Income Tax Act 2025)

Advance tax is income tax paid during the year on income you expect to earn that year, instead of in one lump sum after the year ends. Under section 404 of the Income-tax Act, 2025, you must pay it if the advance tax computed for the year is Rs 10,000 or more. Payment is in four instalments, due on 15 June, 15 September, 15 December and 15 March (section 408), at 15%, 45%, 75% and 100% of the total, cumulatively.

This guide covers who has to pay, who is exempt, how the amount is worked out under section 405, what happens if an Assessing Officer (AO) orders you to pay, and what a shortfall costs. All figures come from the Act as amended by the Finance Act, 2026, and the examples use tax year 2026-27.

Who has to pay advance tax under the Income-tax Act, 2025?

Section 403(1) makes advance tax payable during a financial year on the assessee's current income. Section 403(2) defines current income of a tax year as the total income that would be chargeable to tax for that tax year. Section 404 then adds a threshold: the liability arises only where the advance tax payable for the year, computed under the Part, is Rs 10,000 or more.

Salaried people are covered too. If your salary tax is fully deducted by the employer, the credit for that TDS reduces what is left to pay (see the formula below), and often brings the figure under Rs 10,000.

Who is exempt from advance tax?

Section 403(3) switches the liability off for an individual who meets both conditions:

• resident in India, with no income chargeable under the head "Profits and gains of business or profession"; and
• aged sixty years or more at any time during the tax year.

So a resident senior citizen living on pension, interest and rent need not pay advance tax. The same senior citizen with even a small business or professional income loses the exemption. Note that the exemption is for advance tax only. The return and any self-assessment tax are separate (see our guide on self-assessment tax and interest).

What are the advance tax due dates and instalments?

Section 408(1) sets four instalments. Each is a cumulative percentage of the year's advance tax, reduced by whatever you have already paid.

Instalment	Due on or before	Cumulative amount to have paid
1	15 June	Not less than 15%
2	15 September	Not less than 45%
3	15 December	Not less than 75%
4	15 March	100%

Presumptive taxpayers pay once. Under section 408(2), an assessee who declares profit under section 58(2) (Table Sl. No. 1 or 3) pays the whole advance tax on or before 15 March. Sl. No. 1 is the presumptive scheme for businesses up to the turnover limits in that Table, and Sl. No. 3 is for a specified profession.

Paid by 31 March still counts. Under section 408(3), advance tax paid on or before 31 March is treated as paid during the financial year ending that day. It is credited as advance tax for that year.

How is advance tax computed?

Section 405(1) gives the formula A = B - C.

• A is the advance tax payable for the year.
• B is income-tax on the "specified sum" at the rates in force for the year. Where you pay on your own, the specified sum is your own estimate of current income (section 406(3)).
• C is the tax that will be deducted or collected at source during the year on income that is included in the specified sum, computed before deductions, and where the deductor has actually paid or credited that income after deducting tax (or the collector has received or debited it after collecting tax).

Section 405(2) adds a rule for classes of assessees where the Finance Act of the year requires net agricultural income to be taken into account: for an AO's order, the figure used for the specified sum applies, and in any other case it is the net agricultural income you estimate for the year.

Example 1: instalments for a consultant (tax year 2026-27)

Meena is a self-employed consultant. Assumptions: after her own estimate of current income, income-tax at the rates in force comes to Rs 3,00,000 (B). Her clients will deduct TDS of Rs 60,000 in the year on fees that are part of that income (C). She does not file under the presumptive scheme.

Step	Working	Amount (Rs)
1. Advance tax A = B - C	3,00,000 - 60,000	2,40,000
2. Above Rs 10,000?	Yes, so section 404 applies	-
3. By 15 June: 15%	15% x 2,40,000	36,000
4. By 15 September: 45% less paid	1,08,000 - 36,000	72,000
5. By 15 December: 75% less paid	1,80,000 - 1,08,000	72,000
6. By 15 March: balance	2,40,000 - 1,80,000	60,000
Total	36,000 + 72,000 + 72,000 + 60,000	2,40,000

Example 2: a presumptive trader (tax year 2026-27)

Ravi is an eligible assessee who declares profit under section 58(2), Table Sl. No. 1. Assumptions: income-tax on his total income at the rates in force is Rs 45,000, and no TDS or TCS applies. Under section 408(2) he pays the whole Rs 45,000 on or before 15 March. Had the figure been, say, Rs 9,000, section 404 would not apply and no advance tax would be due.

Can I change the amount between instalments?

Yes. Section 406(2) lets you increase or reduce the remaining instalments if your estimate changes, so that the total matches the new specified sum. You are not locked into the first estimate.

What if the Assessing Officer orders me to pay advance tax?

Section 407 covers an assessee already assessed by regular assessment. The AO can order advance tax in writing, naming the instalments. The specified sum is the higher of (a) total income of the latest tax year assessed by regular assessment and (b) total income returned in any later return (section 407(3)).

Point	Rule	Reference
Last date for the order	Last day of February of the financial year	407(2)
Amended order	Before 1 March of that tax year	407(4), (5)
Followed by	Notice of demand under section 289	407(2), (5)
Notice served after a due date	Amount is payable by each due date falling after service	407(7)
Your estimate is lower	Send an intimation in Form No. 152 and pay as per your estimate	407(8), rule 223
Your estimate is higher	Pay the higher amount by the last instalment date	407(9)

Under section 409 you are deemed an assessee in default if you do not pay an ordered instalment on its date, do not send the section 407(8) intimation by the date the unpaid instalment falls due, or do not pay the higher amount under section 407(9).

Real-life example: an order served late in the year

Ravi's older assessment shows a high income, so in January the AO orders advance tax and the demand notice reaches him after 15 December. Under section 407(7) the amount falls due on the remaining due date, 15 March. If Ravi expects his actual income this year to be lower, he can file Form 152 before 15 March and pay according to his own estimate. If he stays silent and pays nothing, section 409 can make him an assessee in default.

What is the interest if I pay too little or too late?

Section 424(1) charges simple interest at 1% for every month or part of a month if you were liable under section 404 and either paid nothing, or paid under section 406 or 407 less than 90% of the assessed tax. It runs from 1 April following the tax year up to the date total income is determined under section 270(1), or the date of regular assessment where one is made. The base is the whole assessed tax if you paid nothing, or the shortfall against assessed tax if you paid less than 90%.

"Assessed tax" (section 424(2)) is the tax on the total income determined, reduced by TDS/TCS on income included in the total income and by the specified foreign tax reliefs and credits listed there. If you pay tax under section 266 before total income is determined, interest on the earlier shortfall is counted up to the date of that payment, and after that only on any amount still short of the assessed tax (section 424(4)).

Example 3: shortfall below 90% (tax year 2026-27)

Assumptions: Anil's assessed tax for 2026-27 (after reducing TDS and other credits listed in section 424(2)) is Rs 2,00,000. He paid Rs 1,60,000 as advance tax under section 406. He pays the remaining tax under section 266 on 20 July 2027, before his total income is determined.

Step	Working	Result
1. 90% of assessed tax	90% x 2,00,000	Rs 1,80,000
2. Paid less than 90%?	1,60,000 is below 1,80,000	Yes, section 424(1)(b)
3. Shortfall	2,00,000 - 1,60,000	Rs 40,000
4. Months from 1 April to 20 July 2027	April, May, June, and part of July	4
5. Interest	1% x 40,000 x 4	Rs 1,600

Had Anil paid Rs 1,80,000 or more, section 424(1)(b) would not apply, whatever the timing of the instalments, because the test in that clause compares the total advance tax paid with 90% of the assessed tax.

Is there interest for paying advance tax late, instalment by instalment?

Yes. Section 425 charges interest for deferment: paying less than the cumulative share by an instalment date. It is measured against "tax due on the returned income" (section 425(5)), meaning tax on the total income in your return, reduced by TDS/TCS and the foreign tax reliefs listed there.

Instalment date	Cumulative tax due on returned income	Interest rate on the shortfall
15 June	15%	3%
15 September	45%	3%
15 December	75%	3%
15 March	100%	1%

Safe margins. No interest under section 425(1) if you paid at least 12% by 15 June and at least 36% by 15 September (section 425(2)). Presumptive taxpayers (section 58(2), Sl. No. 1 or 3) face simple interest of 1% on any shortfall against the tax due on returned income at 15 March (section 425(3)).

Surprise income. Under section 425(4), no interest arises on a shortfall caused by under-estimating or not foreseeing capital gains, income under section 2(49)(n), business or profession income arising for the first time, or dividend income, provided you pay the full tax on that income in a remaining instalment or by 31 March.

Example 4: a short June instalment (tax year 2026-27)

Assumptions: Meena's tax due on returned income is Rs 2,40,000 and she pays Rs 20,000 by 15 June, then pays every later instalment in full and on time.

Step	Working	Result
1. 12% safe margin	12% x 2,40,000	Rs 28,800 (20,000 is below it)
2. 15% due by 15 June	15% x 2,40,000	Rs 36,000
3. Shortfall	36,000 - 20,000	Rs 16,000
4. Interest at 3%	3% x 16,000	Rs 480

Who needs to pay and how much? A quick check

Real-life example: the retired landlord

Sharda, 63, is a resident with pension, bank interest and rent from a flat, and no business income. She meets both conditions in section 403(3), so she pays no advance tax even though her tax is above Rs 10,000. She settles it with the return. If she started a small consulting practice, the exemption would fall away for that tax year.

Common mistakes

• Paying 25% each quarter. The instalments are cumulative (15%, 45%, 75%, 100%), not equal.
• Forgetting TDS in the formula. Section 405 deducts TDS/TCS on income already in the estimate, so paying on gross tax over-pays.
• Assuming the senior-citizen exemption covers business income. It does not, section 403(3)(a).
• Missing the single 15 March date for presumptive profit. Section 408(2) has no earlier instalments for that group.
• Ignoring an AO's order. Silence after a section 407 order can mean default under section 409. File Form 152 if your estimate is lower.
• Not revising the estimate. Section 406(2) lets you adjust the remaining instalments. A large income spike late in the year is best covered in the next instalment.

Quick reference

Item	Rule	Reference
Liability threshold	Advance tax of Rs 10,000 or more	404
Exempt	Resident individual aged 60+ with no business or profession income	403(3)
Instalments	15 Jun 15%, 15 Sep 45%, 15 Dec 75%, 15 Mar 100%	408(1)
Presumptive (58(2) Sl. No. 1 or 3)	Whole amount by 15 March	408(2)
Interest	1% per month or part, if nil or below 90% of assessed tax	424(1)
AO order cut-off	Last day of February	407(2)
Lower estimate intimation	Form No. 152	407(8), rule 223
Credit	Treated as tax paid, credited in regular assessment	410

Is advance tax credited against my final tax?

Yes. Section 410 says any sum, other than penalty or interest, paid or recovered as advance tax is treated as payment of tax for the year in which it was payable, and credit is given in the regular assessment.

Tracking advance tax across clients

For a CA firm, the hard part is remembering which clients are exempt, which are presumptive and pay only on 15 March, and whose estimate has moved since June. Finexo's practice management software keeps these dates in one task calendar across your client book. It does not compute the tax or make the payment for you. For TDS rules that feed into the C term of the formula, see our guide on TDS on rent.

Where this is in the Act

• Section 403: liability for payment of advance tax; exemption for resident seniors
• Section 404: Rs 10,000 threshold
• Section 405: computation, A = B - C
• Section 406: payment on your own accord; revising the estimate
• Section 407: payment under an AO's order; rule 223 (Form No. 152)
• Section 408: instalments and due dates
• Section 409: when you are deemed in default
• Section 410: credit for advance tax
• Section 424: interest for default in advance tax
• Section 425: interest for deferment of advance tax
• Section 58(2): presumptive Table referred to in section 408(2)

This article explains the Income-tax Act, 2025 (as amended by the Finance Act, 2026). It is general information, not tax advice. Confirm the position for a specific case with a qualified chartered accountant.