Taxpayers who earn income from sources other than salary should keep a close watch on their advance tax payment schedule for FY 2026-27. The deadline for the second instalment of advance tax is September 15, 2026.
Under the advance tax system, eligible taxpayers are required to pay their estimated tax liability during the financial year instead of waiting until the end of the year to pay the entire amount.
For the second instalment, taxpayers generally need to ensure that their total advance tax paid during the year reaches at least 45% of the estimated annual advance tax liability, after adjusting for the amount already paid in the first instalment.
What Is Advance Tax?
Advance tax is essentially a “pay-as-you-earn” tax system. Instead of paying the entire income tax liability after the financial year ends, eligible taxpayers pay tax in instalments during the year.
It can apply to individuals, professionals, freelancers, businesses and other taxpayers whose estimated tax liability, after considering applicable TDS and TCS credits, is ₹10,000 or more for the financial year. The ₹10,000 threshold continues under the Income-tax Act, 2025.
For salaried employees, advance tax is often covered through TDS deducted by the employer. However, additional tax may become payable when a person has income from sources such as:
- Interest from fixed deposits and savings accounts
- Rental income
- Capital gains from shares or mutual funds
- Freelance or professional income
- Business income
- Income from other taxable investments
If the tax payable after considering TDS/TCS crosses the applicable threshold, advance tax requirements may arise.
When Is the 2nd Advance Tax Instalment Due in FY 2026-27?
The second advance tax instalment for FY 2026-27 is due on or before September 15, 2026.
By this deadline, taxpayers who are covered by the regular instalment system should have paid at least 45% of their estimated annual advance tax liability, after taking into account the amount already paid in the first instalment.
Advance Tax Payment Schedule for FY 2026-27
| Instalment | Due Date | Cumulative Advance Tax Payable |
|---|---|---|
| 1st instalment | June 15, 2026 | 15% |
| 2nd instalment | September 15, 2026 | 45% |
| 3rd instalment | December 15, 2026 | 75% |
| 4th instalment | March 15, 2027 | 100% |
The percentages are cumulative. So, the second instalment does not mean that another 45% has to be paid in September. Instead, the total advance tax paid by September 15 should generally reach 45% of the estimated annual liability.
How Much Advance Tax Do You Need to Pay in September 2026?
The amount depends on your estimated total tax liability for FY 2026-27.
For example, suppose your estimated advance tax liability for the entire financial year is ₹2 lakh.
By June 15, you should have paid at least:
15% of ₹2 lakh = ₹30,000
By September 15, your cumulative payment should reach:
45% of ₹2 lakh = ₹90,000
Therefore, if you have already paid ₹30,000 in June, the additional amount required in the second instalment would be:
₹90,000 − ₹30,000 = ₹60,000
So, in this example, you would need to pay ₹60,000 by September 15, 2026 to reach the required cumulative 45% level.
What If Your Income Has Changed Since June?
Advance tax is based on your estimated income and tax liability, so your calculation does not have to remain frozen at the figure you estimated in June.
For example, your income may increase because of:
- A large capital gain
- Higher professional income
- Additional freelance assignments
- Increased rental income
- Interest earned on investments
- Sale of shares or mutual funds
- A bonus or other taxable income
Conversely, your expected income may fall.
Taxpayers should therefore recalculate their estimated annual income and tax liability before making the September instalment. Any excess or shortfall from an earlier instalment can be considered while calculating subsequent instalments.
Who Needs to Pay Advance Tax?
Generally, advance tax becomes applicable when the taxpayer’s estimated tax payable for the year is ₹10,000 or more, after considering eligible tax credits such as TDS/TCS.
This can affect taxpayers who receive significant income outside their regular salary.
For example, a salaried person whose employer deducts TDS may still have an additional advance tax liability if they earn substantial capital gains, rental income, interest or other taxable income.
What About Senior Citizens?
Senior citizens may receive an exemption from advance tax in certain circumstances.
A resident senior citizen who does not have income from a business or profession is generally not required to pay advance tax.
However, the exact position depends on the taxpayer’s circumstances and the nature of income. Therefore, senior citizens with multiple sources of income should check the applicable provisions before assuming that advance tax is not payable.
Special Rule for Presumptive Taxpayers
Taxpayers using certain presumptive taxation schemes have a different advance-tax payment schedule.
Under the new Income-tax Act, 2025, taxpayers opting for the presumptive taxation provisions referred to in Section 58(2) can generally discharge their entire advance tax liability in a single instalment by March 15 of the relevant financial year.
Therefore, eligible taxpayers under the presumptive scheme do not necessarily follow the regular June-September-December-March instalment structure.
What Happens If You Pay Less Advance Tax?
Failing to pay sufficient advance tax, or delaying the required instalments, can result in interest liability.
Under the Income-tax Act, 2025, interest provisions corresponding to the earlier Sections 234B and 234C are contained in Sections 424 and 425.
The Income Tax Department has stated that the applicable interest rates for advance-tax defaults remain unchanged under the new Act.
Therefore, taxpayers should not wait until the final ITR filing stage to discover that insufficient advance tax was paid.
Section 424 vs Section 425: What Is the Difference?
The new Income-tax Act, 2025 reorganises the provisions that taxpayers were familiar with under the old law.
Section 424
Section 424 broadly corresponds to the earlier Section 234B and deals with interest relating to default or short payment of advance tax in specified circumstances.
The applicable interest is generally 1% per month or part of a month for the specified period.
Section 425
Section 425 broadly corresponds to the earlier Section 234C and deals with deferment or short payment of advance-tax instalments.
The applicable interest provisions continue under the new Act, with the Income Tax Department stating that the interest framework has not undergone a policy change.
Do You Need to Pay 45% Again in September?
No.
This is one of the most common misunderstandings about advance tax.
The 45% figure is cumulative.
If your total estimated advance tax liability is ₹5 lakh:
- By June 15: cumulative payment should generally be at least ₹75,000
- By September 15: cumulative payment should generally reach ₹2.25 lakh
- By December 15: cumulative payment should generally reach ₹3.75 lakh
- By March 15: cumulative payment should generally reach ₹5 lakh
Therefore, the amount payable in each instalment depends on how much you have already paid.
What If Your Actual Tax Liability Is Different From Your Estimate?
Advance tax calculations are based on an estimate of your income and tax liability.
If your income changes during the year, you can rework your tax calculation for the next instalment.
For example, if you realise in September that you have earned a significant capital gain that was not included in your June estimate, you should include it while calculating the revised advance tax requirement.
Similarly, if your income estimate falls, your subsequent advance-tax payments can be adjusted accordingly.
The Income Tax Department’s guidance specifically notes that excess or short payment in an earlier instalment can be adjusted in later instalments.
How to Calculate Your Advance Tax for September 2026
A simple calculation can help:
Step 1: Estimate your total taxable income for FY 2026-27.
Step 2: Calculate the income tax payable according to the applicable tax regime and rates.
Step 3: Account for eligible deductions, exemptions, rebates and other applicable tax provisions.
Step 4: Reduce the estimated TDS and TCS that will be available as tax credit.
Step 5: Consider any MAT/AMT credit or applicable tax relief, wherever relevant.
Step 6: Calculate your net advance tax liability.
Step 7: Ensure that your cumulative advance tax payment reaches the required 45% by September 15, 2026.
How to Pay Advance Tax Online
Taxpayers can make their advance-tax payment through the Income Tax e-Filing portal.
When making a payment for income earned during Tax Year/FY 2026-27, taxpayers should select the applicable Income-tax Act, 2025 framework. The Income Tax Department has specifically clarified that advance tax relating to Tax Year 2026-27 is governed by the new Act.
This is particularly important during the transition from the old Income-tax Act, 1961 to the new law.
Taxpayers should carefully select the correct tax year/payment details so that the payment is credited to the appropriate period.
Don’t Confuse FY 2026-27 With AY 2026-27
The transition to the new Income-tax Act has created some confusion around Assessment Year 2026-27 and Tax Year 2026-27.
They relate to different income periods.
AY 2026-27 relates to income earned during FY 2025-26 and continues to be governed by the Income-tax Act, 1961.
On the other hand, advance tax payments relating to income earned during FY 2026-27 are governed by the Income-tax Act, 2025.
Therefore, taxpayers should select the correct year when making a tax payment.
Important Points to Remember Before September 15
Before making your second advance-tax payment, check:
- Total income earned so far
- Expected income for the remaining financial year
- Capital gains, if any
- Interest income
- Rental income
- Business or professional income
- TDS already deducted
- TCS already collected
- Advance tax paid in June
- Applicable deductions and rebates
- Tax payable under the applicable regime
This calculation can help you avoid an unnecessary shortfall.
Bottom Line
The September 15, 2026 deadline is important for taxpayers who are liable to pay advance tax for FY 2026-27.
By the second instalment, eligible taxpayers following the regular schedule should generally have paid at least 45% of their estimated annual advance tax liability, after adjusting for the amount already paid in the earlier instalment.
With the Income-tax Act, 2025 now governing tax payments for FY 2026-27, taxpayers should also be careful while selecting the relevant tax year and payment details.
If your income has changed significantly since the first instalment, recalculate your expected tax liability before making the September payment. Paying the correct amount on time can help reduce the risk of interest on advance-tax shortfall or deferment later.
Disclaimer
This article is intended for general informational purposes only and does not constitute tax, legal or financial advice. Advance-tax liability can vary depending on income, tax regime, deductions, TDS/TCS, capital gains and individual circumstances. Taxpayers should verify the latest provisions on the Income Tax Department’s official portal or consult a qualified tax professional before making tax payments.