Advance Tax in India: Instalment Dates, Who Pays and Interest on Shortfall

Advance tax in India is income tax paid in instalments during the financial year in which the income is earned, instead of in one lump after the year ends. Anyone whose tax for the year, after deducting tax already withheld, reaches Rs 10,000 or more must pay it. Missing or underpaying an instalment triggers interest, which is why the four dates (15 June, 15 September, 15 December and 15 March) sit in every Indian finance team's calendar. This guide uses the Income-tax Act, 2025, which governs advance tax for FY 2026-27 (called tax year 2026-27).

How does advance tax in India work?

Section 403 of the Income-tax Act, 2025 makes advance tax payable on the "current income" of the tax year. Section 404 sets the trigger at Rs 10,000 or more. Section 405 computes it: tax on your estimated income at the rates in force, less tax that will be deducted or collected at source on income you have included. Section 406 lets you pay on your own estimate and revise the remaining instalments up or down as the year unfolds. The Assessing Officer may also order advance tax after a regular assessment (section 407), but only up to the last day of February.

Two groups are treated differently:

• Resident individuals aged 60 or more who have no income from business or profession are exempt from advance tax.
• Presumptive taxpayers under section 58 pay the whole advance tax on or before 15 March in a single instalment.

Any advance tax paid by 31 March counts for that year.

Instalment dates for 2026-27

Each instalment is "not less than" the stated percentage of the year's advance tax, reduced by what was already paid. The CBDT's transition FAQs confirm that the dates and percentages did not change when the new Act began.

How to pay advance tax, step by step

1. Estimate the year's income and the tax on it at the current rates, and subtract expected TDS and TCS shown in your Form 26AS or AIS.
2. Compute the instalment as the cumulative percentage times the total advance tax, less amounts already paid.
3. Pay on the e-Filing portal using e-Pay Tax. The portal has an integrated payment module for both Acts: select Tax Year 2026-27 for FY 2026-27 income and Assessment Year 2026-27 for FY 2025-26 payments, so the credit lands in the right year.
4. Choose the advance tax payment type and keep the challan.
5. Revise later instalments if your estimate changes.
6. Report the payment in the return, where it is credited against your liability.

For FY 2025-26, any shortfall interest is levied under sections 234B and 234C of the 1961 Act, as the Department's FAQ explains.

Interest on shortfall, in plain English

"Assessed tax" means the tax on total income reduced by tax deducted or collected at source and by credit for foreign tax. Tax paid before the intimation counts as it is paid, and interest is recalculated up to that date. See penalties and interest explained for the broader picture.

A worked example

A Pune company estimates tax of Rs 40 lakh for FY 2026-27, with Rs 10 lakh expected through TDS and TCS. Advance tax is Rs 30 lakh: at least Rs 4.5 lakh by 15 June, Rs 13.5 lakh cumulative by 15 September, Rs 22.5 lakh cumulative by 15 December 2026 and Rs 30 lakh by 15 March 2027. The company pays Rs 27 lakh in all because profits rose, and assessed tax after TDS is Rs 32 lakh. Rs 27 lakh is below 90% of Rs 32 lakh (Rs 28.8 lakh), so it owes 1% a month on the Rs 5 lakh shortfall from 1 April 2027. If it pays Rs 5 lakh as self-assessment tax on 20 July 2027, that is about four months of interest, roughly Rs 20,000, before the separate instalment-deferment interest.

Documents and information you need

• Your latest Form 26AS or Annual Information Statement, which lists TDS, TCS and some high-value transactions
• A year-to-date profit and loss account or income projection, including capital gains and foreign income
• Last year's return and computation, for a baseline
• Challan details from every earlier instalment
• Login access to the e-Filing portal or your bank's tax payment facility

Keep the estimate file with your return papers. If the department later questions an interest charge, the dated estimate is your evidence that each instalment followed a reasonable forecast. See the income tax portal, AIS and Form 26AS guide for where to find the credits.

Mistakes to avoid

• Ignoring advance tax because "TDS covers it" without checking the net amount
• Paying under the wrong year, so the credit sits in the other Act
• Missing the single 15 March date for presumptive taxpayers
• Forgetting capital gains and one-time income, which need advance tax when they arise
• Relying on a stale estimate instead of revising

How we can help

From Aurora, Illinois, we model U.S. estimated tax and foreign tax credit effects so Indian advance tax is not paid twice in cash-flow terms. Your Indian Chartered Accountant computes and pays the Indian instalments, and we coordinate with the Indian return. See individual returns for newcomers and NRIs and cross-border tax. Browse the full India: Tax and Compliance section.

Frequently asked questions

General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.