Advance Tax Second Instalment: 15 September 2026 Deadline for FY 2026-27
- Who must pay: Anyone with an estimated tax liability above ₹10,000 after TDS — freelancers, business owners, investors, and salaried employees with additional income
- How much by 15 September: 45% of your estimated annual tax liability, cumulative — subtract whatever you paid in June
- Penalty for missing it: 1% per month simple interest under Section 234C for 3 months on the shortfall at each instalment date
- Exceptions: Senior citizens with no business income are exempt; presumptive-tax filers (Sections 44AD and 44ADA) may pay 100% in a single instalment by 15 March 2027
The Income Tax Act requires most taxpayers to pay their annual tax across four instalments spread through the financial year, rather than settling everything at year-end. The second instalment for FY 2026-27 falls on 15 September 2026, and by that date you must have paid a cumulative 45% of your estimated tax liability for the year.
If you are a freelancer billing clients without TDS deducted, a business owner drawing profits, an investor who has realised capital gains, or a salaried employee with significant income from rent or fixed deposits — this deadline applies to you. Missing it, or underpaying, triggers an interest charge that runs automatically regardless of whether you eventually pay the full tax by year-end.
The Four-Instalment Schedule for FY 2026-27
Advance tax is not a single lump payment — it is a rolling commitment across the financial year. Each instalment sets a cumulative minimum, not an incremental one. If you paid nothing in June, the full 45% is due this month.
| Instalment | Due Date | Cumulative % of Annual Tax |
|---|---|---|
| 1st | 15 June 2026 | ≥ 15% |
| 2nd | 15 September 2026 | ≥ 45% |
| 3rd | 15 December 2026 | ≥ 75% |
| 4th | 15 March 2027 | 100% |
"Cumulative" is the word that trips most people up. If you paid ₹15,000 in June as your 15%, your September obligation is the total 45% figure minus the ₹15,000 already paid — not an additional 45% on top.
How to Calculate Your September Amount
The calculation works in three steps.
Step 1 — Estimate your gross total income for the full year. Include salary or business profit, rental income, capital gains, interest from deposits, and any freelance or consulting income. You are projecting, not filing — a reasonable estimate is all that is required.
Step 2 — Compute your tax and deduct TDS. Apply the applicable slab rates for FY 2026-27 to your estimated income and add 4% health and education cess. Then deduct any TDS already deducted by employers, clients, or banks, or expected to be deducted before 31 March 2027. The result is your net advance tax payable for the year.
Step 3 — Apply the instalment percentage. Multiply your net estimated tax by 45% to arrive at the cumulative amount due. Subtract any advance tax you have already deposited this financial year.
💡 Worked example: You estimate your annual tax liability (after cess) at ₹1,20,000 and expect ₹20,000 in TDS across the year. Net advance tax = ₹1,00,000. The 45% cumulative target = ₹45,000. You paid ₹15,000 in June. Amount due by 15 September: ₹30,000.
Estimating your figures before year-end
Most income statements — Form 16, interest certificates, capital gains statements from brokers — are not available until well after the financial year closes. Advance tax requires you to estimate now, mid-year. A quick manual estimate using the steps above is usually sufficient for the purpose; precision comes at filing time.
To help with this, we have built a free advance tax calculator that lets you enter your estimated income across categories and outputs the amount due at each instalment. It covers both the new and old tax regimes and handles capital gains separately. The Income Tax India portal also provides an official tax calculator if you prefer to work directly on the government site.
📋 Important: For straightforward cases — a single salary with one or two additional income sources — a manual estimate is usually adequate. If your situation involves multiple capital gain transactions, business income with deductible expenses, RSU vesting, foreign income, or DTAA claims, the calculation becomes materially more complex. In those cases it is strongly recommended to consult a qualified tax advisor or chartered accountant before making your advance tax deposit.
Who Is Exempt — and Who Gets a Special Rule
Not every taxpayer is subject to the four-instalment schedule.
Senior citizens aged 60 or above with no business income are fully exempt from advance tax under Section 207. If your only income is pension, interest, rent, or capital gains, you have no advance tax obligation — you settle any balance at year-end through self-assessment tax.
Presumptive taxation filers under Section 44AD (small businesses with turnover up to ₹3 crore under the cash-receipt threshold) and Section 44ADA (specified professionals such as doctors, architects, and consultants with gross receipts up to ₹75 lakh) are allowed to pay the entire advance tax in a single payment by 15 March 2027. The four-instalment requirement does not apply to them.
Capital gains and windfall income arising after an instalment due date may be included in the immediately following instalment without attracting Section 234C interest. If you sold equity or property in August 2026, that gain is factored into your September calculation — you are not penalised for not having included it in June.
⚠️ NRI note: Non-resident Indians with Indian-source income — rental income from Indian property, capital gains on Indian assets, or interest from NRO accounts — are equally liable for advance tax on income not already subject to full withholding. The same four-instalment schedule and Section 234C penalties apply. DTAA relief, if applicable, reduces your gross tax but does not exempt you from the advance tax mechanism itself.
The Section 234C Interest Charge for Missing an Instalment
The cost of missing the September instalment — or paying less than the 45% cumulative requirement — is interest under Section 234C at 1% simple interest per month for 3 months on the shortfall.
On a net advance tax liability of ₹1,00,000, a full miss at September means interest on the ₹45,000 shortfall for 3 months: ₹1,350. That figure is modest, but it compounds with the December shortfall if you still have not caught up, and the interest is assessed automatically by the system when you file your return — there is no waiver process for routine shortfalls.
A separate provision, Section 234B, applies if your total advance tax paid across all four instalments falls below 90% of your final assessed tax liability. Interest runs at 1% per month from 1 April 2027 until the date of payment, which can become significant on large liabilities that were underpaid throughout the year.
📋 How to pay: Use Challan 280 on the Income Tax e-Filing portal — select Tax Applicable (0021) Income Tax (Other than Companies) and choose Advance Tax (100) as the type of payment. Your bank's net banking or authorised branch will also accept Challan 280. Retain the counterfoil or the BSR code and challan serial number — you will need these when filing your ITR to claim the advance tax credit.
A Note on Estimates
The advance tax system is designed around projections, not certainty. The Income Tax Act does not penalise you for estimating imperfectly — it penalises you for failing to pay a reasonable cumulative amount on time. If your income turns out higher or lower than projected, you adjust in subsequent instalments. The only instalment where the number must be exact is the fourth, on 15 March 2027, which must represent 100% of your actual liability.
If this is your first year managing advance tax — because you left employment, began freelancing, or received a large capital gain — the calculation can feel opaque. Running the numbers now with your best estimate, and depositing Challan 280 before the 15th, is always better than waiting for certainty that may not arrive before the deadline does.
This post is general information only and does not constitute tax, financial, or investment advice. Tax rules are subject to change — verify current rates and thresholds on the Income Tax India portal or consult a qualified tax professional.