Advance Tax Payment FY 2026-27: Due Dates, Calculation, Online Process and Penalties
- CA Pratik Bharda
- Jun 5
- 15 min read
Advance tax payment is required when your estimated tax liability for the year exceeds the prescribed limit after reducing TDS and TCS. Instead of waiting until return filing, taxpayers are expected to pay income tax during the year as income is earned. This is why advance tax is often called the “pay-as-you-earn” system. For FY 2026-27, advance tax becomes especially important because the Income Tax Act, 2025 applies from 1 April 2026, and the e-filing portal has also introduced new challan forms for Tax Year 2026-27. Taxpayers must select the correct tax year and challan details while making payments online.
Freelancers, consultants, business owners, traders, investors, landlords, and salaried individuals with additional income should estimate their tax liability early. Missing advance tax deadlines can lead to interest, even if the income tax return is filed correctly later.
Table of Content
What is Advance Tax Payment?
Advance tax payment means paying income tax during the financial year instead of paying the full tax after the year ends. It applies when the taxpayer’s estimated tax payable, after reducing TDS and TCS, exceeds ₹10,000.
Under the Income Tax Act, 2025, advance tax provisions are covered under Sections 403 to 410. These provisions continue the same broad principle that existed under the Income Tax Act, 1961, but with revised section numbering.
The purpose is simple. If income is earned during the year, tax should also be paid during the year. This helps taxpayers avoid a large year-end payment and helps the government collect taxes steadily.
Advance tax may apply to:
Salaried individuals with additional income
Freelancers and consultants
Professionals
Business owners
Traders
Investors
Landlords
NRIs with taxable Indian income
Individuals earning foreign income taxable in India
For example, a salaried person may already have TDS deducted by the employer. But if the same person earns capital gains, rental income, interest income, or freelance income, TDS may not fully cover the final tax liability. In such cases, advance tax payment may become necessary.
Who Should Pay Advance Tax in FY 2026-27?
Any taxpayer whose estimated tax liability exceeds ₹10,000 after deducting TDS and TCS must pay advance tax. This rule applies across taxpayer categories.
Salaried Individuals
Salaried taxpayers often assume that advance tax does not apply to them. This is not always correct.
Advance tax may apply if they earn income such as:
Capital gains from shares, mutual funds, property, or crypto assets
Rental income
Interest income from fixed deposits
Dividend income
Freelance or consulting income
Foreign income
Taxable gifts
Income from a previous employer was not properly reported to the new employer
A common situation occurs during job changes. If an employee does not disclose previous salary details to the new employer, both employers may allow basic exemption or slab benefits separately. This can result in lower TDS and a tax shortfall at the end of the year.
Freelancers and Consultants
Freelancers and consultants usually receive professional fees after TDS deduction. However, TDS may not be enough to cover the full tax liability.
For example, a consultant may receive ₹24 Lakh during the year with 10% TDS. After expenses, deductions, and slab calculation, the final tax may still be higher than the TDS deducted. If the balance tax payable exceeds ₹10,000, advance tax is required.
This applies to:
IT consultants
Designers
Content writers
Digital marketers
Doctors
Lawyers
Chartered accountants
Architects
Management consultants
Social media professionals
Business Owners and Traders
Business income is often not subject to full TDS. Therefore, proprietors, partnership firms, LLPs, and companies need to estimate profits and pay advance tax.
Advance tax may apply to:
Retail businesses
E-commerce sellers
Service businesses
Manufacturing units
F&O traders
Intraday traders
Commission agents
Contractors
Business owners should not wait until final accounts are prepared. A reasonable estimate should be made during the year and revised whenever profits change significantly.
Investors and Landlords
Investors may need advance tax if they earn:
Short-term capital gains
Long-term capital gains
Dividend income
Bond interest
Foreign investment income
Landlords may also need to pay advance tax if rental income creates additional tax liability after TDS, deductions, and other tax credits.
Who is Not Required to Pay Advance Tax?
Advance tax is not required in every case. The exemption depends on tax liability, age, and the nature of income.
Tax Liability Does Not Exceed ₹10,000
If the estimated net tax payable after reducing TDS and TCS is ₹10,000 or less, advance tax payment is not mandatory.
Particulars | Amount |
Total tax liability | ₹64,000 |
TDS already deducted | ₹56,500 |
Net tax payable | ₹7,500 |
In this case, advance tax is not required because the balance tax payable is below ₹10,000.
Senior Citizens Without Business or Professional Income
Resident senior citizens aged 60 years or above are not required to pay advance tax if they do not have income from business or profession.
This exemption may apply even if they earn:
Pension income
Interest income
Rental income
Dividend income
Capital gains
Family pension
The key condition is that they should not have income under the head “Profits and Gains from Business or Profession.”
For example, a 67-year-old retired person earning a pension, FD interest, and rent may not be required to pay advance tax. But if the same person starts consultancy work, the exemption will not apply.
Senior Citizens With Professional Income
Senior citizens earning business or professional income must pay advance tax if their net tax liability exceeds ₹10,000.
This includes retired professionals who continue working as:
Consultants
Doctors
Lawyers
Architects
Accountants
Business owners
Commission agents
Advance Tax Due Dates for FY 2026-27
For most taxpayers, advance tax is payable in four instalments during the financial year. The standard due dates are 15 June, 15 September, 15 December, and 15 March.
Due Date | Cumulative Tax Payable |
On or before 15 June 2026 | 15% of total estimated tax |
On or before 15 September 2026 | 45% of total estimated tax |
On or before 15 December 2026 | 75% of total estimated tax |
On or before 15 March 2027 | 100% of total estimated tax |
The percentage is cumulative. This means that by 15 September 2026, the taxpayer should have paid 45% of the total estimated tax, not an additional 45%.
Example of Installment Split
If the estimated advance tax payable is ₹2,00,000, the payment schedule will be:
Due Date | Cumulative Amount Required | Additional Payment Required |
15 June 2026 | ₹30,000 | ₹30,000 |
15 September 2026 | ₹90,000 | ₹60,000 |
15 December 2026 | ₹1,50,000 | ₹60,000 |
15 March 2027 | ₹2,00,000 | ₹50,000 |
This structure helps taxpayers spread the tax burden across the year.
Advance Tax Payment for Presumptive Taxpayers
Taxpayers opting for presumptive taxation get a simpler payment rule.
Small businesses covered under Section 44AD and professionals covered under Section 44ADA can pay the full advance tax by 15 March 2027. They do not need to follow the four-installment schedule.
This is useful because many small businesses and professionals may not know their exact annual income during the early part of the year.
For example, a consultant choosing presumptive taxation under Section 44ADA can estimate annual receipts and pay 100% advance tax by 15 March 2027.
However, this relaxation applies only when the taxpayer is actually opting for presumptive taxation. If the taxpayer maintains books and follows normal taxation, the regular instalment schedule applies.
How to Calculate Advance Tax Payment
Advance tax calculation is based on estimated income. The estimate does not need to be perfect, but it should be reasonable and updated during the year.
Step 1: Estimate Total Income
Include all expected income for FY 2026-27, such as:
Salary
Business income
Professional income
Rental income
Interest income
Dividend income
Capital gains
Foreign income
Commission income
Other taxable receipts
Step 2: Reduce Eligible Deductions
Depending on the tax regime selected, reduce eligible deductions and exemptions.
Under the old tax regime, deductions may include:
Section 80D
Section 80CCD
HRA exemption
Home loan interest
Other eligible deductions
Under the new tax regime, many deductions are not available. Therefore, taxpayers should calculate advance tax based on the regime that is more likely to be selected while filing the return.
Step 3: Calculate Tax on Estimated Income
Apply the applicable slab rates or tax rate based on the taxpayer type. Add surcharge, if applicable, and health and education cess.
Step 4: Reduce TDS and TCS
Subtract tax already deducted or collected, such as:
TDS by the employer
TDS by clients
TDS by banks
TDS on rent
TDS on sale of property
TCS on foreign remittance
Other tax credits
Step 5: Check Whether Net Tax Exceeds ₹10,000
If the balance tax payable exceeds ₹10,000, advance tax must be paid as per the applicable schedule.
Practical Examples of Advance Tax Calculation
Example 1: Freelancer Under Normal Taxation
Aarav is a freelance software developer. He does not opt for presumptive taxation and maintains expense records.
Particulars | Amount |
Gross professional receipts | ₹28,00,000 |
Business expenses | ₹6,00,000 |
Net professional income | ₹22,00,000 |
Eligible deductions | ₹1,50,000 |
Taxable income | ₹20,50,000 |
Estimated tax including cess | ₹4,15,000 |
TDS deducted by clients | ₹2,80,000 |
Net advance tax payable | ₹1,35,000 |
Since the net tax payable is more than ₹10,000, Aarav must pay advance tax.
Payment schedule:
15 June 2026: ₹20,250
15 September 2026: ₹60,750 cumulative
15 December 2026: ₹1,01,250 cumulative
15 March 2027: ₹1,35,000 cumulative
If Aarav’s income increases during the year, he should revise the estimate and pay higher amounts in later installments.
Example 2: Salaried Employee With Capital Gains
Meera earns salary income, and her employer deducts TDS correctly. During FY 2026-27, she sells equity mutual funds and earns capital gains.
Salary TDS fully covers her salary tax. However, she has an additional tax liability of ₹48,000 on capital gains.
Since the additional tax payable exceeds ₹10,000, she should pay advance tax.
If the capital gain arises in November 2026, she does not need to worry about the June and September installments for that income because it was not predictable earlier. She should pay the required advance tax in the remaining installments, mainly December and March.
This is an important practical point for investors. Advance tax liability should be reviewed whenever a large gain is realised.
Example 3: Consultant Under Presumptive Taxation
Nisha is a management consultant and opts for presumptive taxation under Section 44ADA.
Particulars | Amount |
Gross receipts | ₹40,00,000 |
Presumptive income at 50% | ₹20,00,000 |
TDS deducted by clients | ₹4,00,000 |
Estimated final tax | ₹4,60,000 |
Net tax payable | ₹60,000 |
Since she is under presumptive taxation, she can pay the full advance tax of ₹60,000 by 15 March 2027.
She does not have to pay advance tax in June, September, and December.
Advance Tax Rules for Different Income Types
Advance tax treatment can feel confusing because income does not arise in the same manner for every taxpayer.
Salary Income
For salary, TDS usually covers the tax liability. But advance tax may apply if:
The employer deducts lower TDS
The employee changes jobs and does not report earlier salary
Bonus or ESOP income is not fully considered
The employee has additional income outside salary
Business and Professional Income
Business and professional income is one of the most common reasons for advance tax. Since profits can change during the year, taxpayers should revise their estimates periodically.
A business owner should ideally review advance tax before each installment date.
Capital Gains
Capital gains may arise suddenly. Taxpayers cannot always predict when shares, mutual funds, property, or other assets will be sold.
If capital gains arise after a particular installment date, tax should be paid in the remaining installments. This reduces the risk of interest for deferment.
Interest and Dividend Income
Bank FD interest, recurring deposit interest, bond interest, and dividend income should be included while estimating advance tax.
Many taxpayers assume bank TDS is enough. But banks usually deduct TDS at a fixed rate, which may be lower than the taxpayer’s slab rate. This can create additional liability.
Rental Income
Rental income should be included after considering standard deduction and eligible interest on housing loan, if applicable.
If the tenant deducts TDS, the same should be reduced while calculating advance tax.
Foreign Income
Residents with foreign income taxable in India should include it in advance tax estimates. Foreign tax credits, if available, should be considered carefully while calculating final liability.
How to Pay Advance Tax Online
Advance tax can be paid online through the income tax e-filing portal. The Income Tax Department’s payment guide states that taxpayers can use the e-Pay Tax option from Quick Links, enter PAN/TAN and mobile number, verify OTP, and proceed with the appropriate payment option.
Method 1: Payment After Login
Follow these steps:
Visit the income tax e-filing portal.
Log in using PAN or user ID and password.
Go to e-File.
Select e-Pay Tax.
Click New Payment.
Choose Income Tax.
Select the correct Tax Year, such as Tax Year 2026-27.
Select Advance Tax as the payment type.
Enter the tax amount.
Choose payment mode.
Complete the payment.
Download and save the challan receipt.
Method 2: Payment Without Login
Taxpayers can also pay without logging in.
Basic steps:
Visit the income tax portal.
Select e-Pay Tax from Quick Links.
Enter PAN/TAN and mobile number.
Verify OTP.
Confirm taxpayer details.
Select Income Tax.
Choose the correct Tax Year.
Select advance tax payment.
Make payment.
Download the receipt.
Details to Check Before Payment
Before completing payment, verify:
PAN
Name
Tax Year
Type of payment
Amount
Mobile number
Email ID
Bank/payment method
After payment, save the challan receipt because it contains important details such as BSR code, challan serial number, payment date, and amount.
Interest and Penalties for Late or Short Payment
If advance tax is not paid properly, interest may apply. Under the Income Tax Act, 2025, interest provisions are referred to under Section 424 and Section 425, as per the revised section framework shared in the source material.
Interest for Short Payment
If the taxpayer does not pay at least 90% of the final tax liability by 31 March, interest may apply at 1% per month on the shortfall.
This usually affects taxpayers who:
Do not estimate income properly
Ignore capital gains
Rely only on TDS
Miss March payment
Underestimate business profits
Interest for Deferment of Installments
Interest may also apply if the taxpayer does not pay the required percentage by each installment date.
For example, if a taxpayer should have paid 45% by 15 September but pays only 20%, interest may apply on the shortfall.
The interest is generally calculated automatically while filing the income tax return.
Challan Correction and Excess Advance Tax Refund
If Excess Advance Tax is Paid
If advance tax paid is more than the final tax liability, the excess amount can be claimed as a refund while filing the income tax return.
For example, if total tax liability is ₹1,20,000 and advance tax plus TDS totals ₹1,45,000, the excess ₹25,000 can be claimed as refund.
The refund is processed after return filing and verification, subject to income tax department checks.
If Wrong Details Are Selected
Mistakes may happen while making advance tax payment. Common errors include:
Wrong Tax Year
Wrong PAN
Wrong payment type
Wrong minor head
Incorrect amount split
Duplicate payment
The income tax portal provides payment history and challan-related services. Taxpayers should check whether correction is possible through the portal or through the concerned bank/payment channel depending on the nature of the mistake.
The e-filing portal’s e-Pay Tax FAQ notes that a successful challan receipt can be downloaded from Payment History after logging in.
Recent Updates for FY 2026-27
FY 2026-27 is important because it marks the practical transition to the Income Tax Act, 2025.
Income Tax Act, 2025 Applies From 1 April 2026
The income tax portal has stated that forms under the Income Tax Act, 2025 will be available from 1 April 2026 and taxpayers should select the correct form for compliance.
For advance tax, this means taxpayers should understand the revised section numbering and use the correct Tax Year while making payments.
New Challan Forms for Tax Year 2026-27
The e-filing portal has also mentioned that new challan forms are live for payments under the Income Tax Act, 2025 and users should use the new challans for Tax Year 2026-27.
This makes it even more important to avoid blindly following old challan references without checking the current portal flow.
Stronger Digital Reporting
Advance tax planning is also becoming more data-driven because AIS, TIS, TDS, SFT, and portal reporting make it easier for the department to identify income mismatches.
Taxpayers should review:
AIS
Form 26AS
TDS credits
Broker statements
Bank interest certificates
Rent details
Foreign income details
Capital gains reports
Common Mistakes to Avoid
Mistake | Possible Impact |
Assuming TDS covers all income | Short payment and interest |
Ignoring capital gains | Advance tax shortfall |
Selecting wrong Tax Year | Credit mismatch |
Paying under wrong category | Challan correction issues |
Not revising income estimate | Interest on shortfall |
Missing March deadline | Higher final tax burden |
The biggest mistake is treating advance tax as a year-end activity. It should be reviewed during the year, especially when income is irregular or investment transactions are frequent.
Benefits and Limitations of Advance Tax Payment
Benefits
Advance tax helps taxpayers:
Avoid heavy tax payment at year-end
Reduce interest liability
Improve cash flow planning
Stay compliant during the year
Track income more carefully
Avoid surprises while filing ITR
It is particularly useful for taxpayers with multiple income sources.
Limitations
Advance tax also has practical challenges:
Income estimation may be difficult
Business profits can change quickly
Capital gains may be unpredictable
Freelancers may receive delayed payments
Wrong estimates may cause excess payment or shortfall
Tax regime selection may affect calculation
Taxpayers with fluctuating income should not rely on a single estimate prepared at the beginning of the year. They should update the calculation before each due date.
Conclusion
Advance tax payment is not limited to businesses. In FY 2026-27, salaried individuals with additional income, freelancers, consultants, investors, traders, landlords, and professionals may all fall under advance tax rules if their net tax liability exceeds ₹10,000.
The safest approach is to estimate total income, reduce TDS and TCS, check the balance tax payable, and pay instalments on time. Taxpayers should also be careful while selecting the correct Tax Year and payment type on the income tax portal, especially after the shift to the Income Tax Act, 2025.
A simple quarterly review can prevent unnecessary interest, refund delays, and compliance stress during return filing.
FAQs
Q1. What is advance tax payment?
Advance tax payment means paying income tax during the financial year instead of paying the entire tax after the year ends. It applies when the estimated tax payable after reducing TDS and TCS exceeds ₹10,000. It is based on the pay-as-you-earn concept. Taxpayers estimate their annual income, calculate tax, reduce tax credits, and pay the balance in installments. It is commonly applicable to freelancers, businesses, professionals, investors, and salaried individuals with additional income.
Q2. Who needs to pay advance tax for FY 2026-27?
Any taxpayer whose estimated net tax liability exceeds ₹10,000 for FY 2026-27 must pay advance tax. This can include salaried individuals, freelancers, consultants, business owners, traders, investors, landlords, companies, firms, and NRIs with taxable Indian income. The threshold is checked after reducing TDS and TCS. If TDS fully covers the tax liability, advance tax may not be required. But if additional income creates a shortfall above ₹10,000, advance tax becomes applicable.
Q3. Are salaried employees required to pay advance tax?
Salaried employees may need to pay advance tax if employer TDS is not enough. This commonly happens when the employee earns capital gains, rental income, fixed deposit interest, freelance income, foreign income, dividend income, or taxable gifts. It may also happen during job changes if previous salary is not reported to the new employer. If the final tax payable after TDS exceeds ₹10,000, advance tax payment is required.
Q4. What are the advance tax due dates for FY 2026-27?
For regular taxpayers, advance tax is payable in four installments. At least 15% should be paid by 15 June 2026, 45% by 15 September 2026, 75% by 15 December 2026, and 100% by 15 March 2027. These percentages are cumulative. Taxpayers under presumptive taxation schemes such as Section 44AD or Section 44ADA can generally pay 100% of advance tax by 15 March 2027.
Q5. How is advance tax calculated?
Advance tax is calculated by estimating total income for the financial year, reducing eligible deductions, computing tax under the selected tax regime, adding cess and surcharge where applicable, and subtracting TDS/TCS credits. If the balance tax payable exceeds ₹10,000, advance tax should be paid. The estimate should be updated whenever income changes because advance tax is based on expected annual income, not only income already received.
Q6. Is advance tax applicable to capital gains?
Yes, capital gains are included while calculating advance tax. However, capital gains may not be predictable at the beginning of the year. If a taxpayer sells shares, mutual funds, property, or other assets during the year, the tax should be calculated after the gain arises and paid in the remaining advance tax installments. This helps avoid interest for short payment or deferment.
Q7. Do senior citizens have to pay advance tax?
Resident senior citizens aged 60 years or above do not have to pay advance tax if they do not have business or professional income. They may earn pension, interest, rent, dividend, or capital gains and still be exempt from advance tax. However, if a senior citizen earns income from consultancy, freelancing, professional practice, proprietorship, or business, advance tax applies if the net tax liability exceeds ₹10,000.
Q8. How can advance tax be paid online?
Advance tax can be paid through the income tax e-filing portal using the e-Pay Tax facility. Taxpayers can pay after logging in or through Quick Links without login. They need to verify PAN, select Income Tax, choose the correct Tax Year, select advance tax as the payment type, enter the amount, and complete payment through the available payment mode. The challan receipt should be downloaded and saved.
Q9. What happens if advance tax is not paid?
If advance tax is not paid or is paid short, interest may apply. Interest can arise for short payment of total tax as well as deferment of specific installments. The interest is generally calculated at 1% per month, depending on the nature and period of default. Even if the taxpayer files the income tax return correctly later, the interest may still be payable during return filing or processing.
Q10. Can advance tax be revised during the year?
Yes, advance tax estimates can be revised during the year. If income increases because of higher profits, bonus, capital gains, rent, interest, or freelance receipts, the taxpayer can pay more in the next installment. If income reduces, future payments can be adjusted accordingly. Regular revision is useful for freelancers, business owners, traders, and investors because their income may not remain fixed throughout the year.
Q11. What if excess advance tax is paid?
If excess advance tax is paid, the taxpayer can claim the excess amount as a refund while filing the income tax return. The refund will be processed after return filing, verification, and departmental checks. Taxpayers should ensure that all challan details are correctly reflected in the tax credit statement before filing the return. Any mismatch should be corrected or reported properly to avoid refund delays.
Q12. What are common advance tax payment mistakes?
Common mistakes include ignoring income outside salary, not considering capital gains, assuming bank TDS is sufficient, choosing the wrong Tax Year, selecting the wrong payment type, missing installment dates, and not revising estimates during the year. These mistakes can result in interest, tax credit mismatch, refund delays, or unnecessary compliance issues. Taxpayers should review income, TDS, AIS, and payment records before every due date.
Endless Mode of Dashmetry focuses on survival and endurance. Players aim to achieve high scores by surviving as long as possible in a continuously accelerating environment. It tests reflexes, consistency, and long-term focus.