Advance Tax in FY 2026-27 — Instalments, Interest and Who Must Pay
If your tax liability for the year, after subtracting TDS that others deduct on your behalf, comes to more than ₹10,000, the law expects you to pay it through the year — not as one cheque next July. The schedule for FY 2026-27: at least 15% of the year's tax by 15 June 2026, 45% by 15 September, 75% by 15 December, and the full amount by 15 March 2027. This applies equally to individuals, HUFs, firms, LLPs and companies.
The cost of getting it wrong is interest, not penalty — but it compounds quietly. Section 234C charges 1% per month, typically for three months, on each instalment shortfall, and Section 234B adds another 1% per month from April onwards if you finish the year having paid less than 90% of your assessed tax. A useful relief: tax on income you could not have foreseen, like a capital gain in January, only needs to be covered in the instalments that fall after the gain arises.
Two carve-outs matter. Resident senior citizens aged 75 and above with only pension and specified bank interest have no advance tax obligation. And taxpayers under presumptive schemes — Section 44AD businesses and 44ADA professionals — can pay everything in one go by 15 March instead of four instalments. Salaried employees are usually covered by TDS on salary, but rent, deposit interest, dividends and capital gains often push them over the ₹10,000 line without their noticing.
Feed the calculator your estimated income and expected TDS, and it returns the exact rupee amount due on each date, flags dates already past, and confirms when no advance tax is payable at all. If you have not yet worked out the year's total liability, start with our Income Tax Calculator — at PGA & Co. we run this same two-step estimate for clients each June and revise it every quarter.
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Frequently Asked Questions
Do salaried employees need to pay advance tax?
Often yes, even though TDS covers their salary. Bank and FD interest, dividends, rental income, and capital gains from shares or property typically have little or no TDS against the actual tax they create. If the combined shortfall exceeds ₹10,000 for the year, quarterly advance tax is due on that other income — this is among the most common causes of interest charges on salaried returns.
How is interest under Sections 234B and 234C actually calculated?
Section 234C charges 1% simple interest per month on each quarterly shortfall — for three months on the June, September and December instalments, and one month on March. Section 234B then applies if your total payments by 31 March are under 90% of the final tax: 1% per month on the unpaid amount from 1 April until you pay. Both can apply in the same year, which is why a single missed instalment is rarely just a timing issue.
My income arrived late in the year — a property sale in February. Am I penalised for earlier instalments?
No. For income that could not be estimated in advance — capital gains, lottery winnings, a new business's first profits — Section 234C interest does not apply to instalments that fell due before the income arose. You must include the resulting tax in the instalment immediately following the event (or by 31 March if none remains). Pay it there and no interest arises on the earlier quarters.
What happens if I overpay advance tax?
The excess comes back as a refund after you file your return, with interest under Section 244A — generally 0.5% per month from 1 April of the assessment year. Overpaying is therefore far cheaper than underpaying, but it still locks up working capital, which is why we revise client estimates each quarter rather than front-loading the year.
How do I actually pay an advance tax instalment?
Through the e-Pay Tax facility on the income tax portal: select Challan No. ITNS 280, assessment year 2027-28 for FY 2026-27 income, and the 'Advance Tax (100)' payment type. Net banking, UPI and cards are accepted, and the challan credit appears in your Form 26AS/AIS within a few days. Keep the challan reference — you will report instalment-wise figures in your return.