Advance Tax September 2026: Calculation, Payment Deadline & Section 234C Interest
TL;DR The second advance-tax instalment for September 2026 is due on 15 September 2026. By this date, eligible taxpayers generally need to have paid 45% of their estimated annual advance-tax liability cumulatively, after considering the first instalment. Advance tax is calculated after estimating total taxable income and reducing eligible TDS/TCS and taxes already paid. Under the Income Tax Act, 1961, deferment of advance-tax instalments can attract interest under Section 234C. For Tax Year 2026–27 under the Income Tax Act, 2025, the corresponding provision is Section 425. Introduction September is an important month for taxpayers who are required to pay advance tax. The second instalment of advance tax is due on 15 September 2026, making it essential for individuals, businesses and professionals to reassess their expected income and tax liability before the deadline. Advance tax is essentially a system of paying income tax during the year instead of waiting until the end of the financial year. It can apply when the taxpayer’s estimated tax liability, after reducing eligible TDS/TCS, reaches the prescribed threshold. For taxpayers following the FY 2025–26 / AY 2026–27 framework, the relevant provisions continue under the Income-tax Act, 1961. For income falling under Tax Year 2026–27, the Income Tax Act, 2025 introduces new section numbers, with the advance-tax provisions corresponding to the earlier framework. Understanding the September instalment, calculation method and Section 234C interest can help taxpayers avoid unnecessary interest and cash-flow surprises. What Is Advance Tax? Advance tax is income tax paid during the financial year based on estimated taxable income. Instead of paying the entire tax liability after the year ends, eligible taxpayers make payments in instalments. Advance tax can become relevant for income such as: Business income Professional income Capital gains Interest income Rental income Dividend income Other taxable income TDS and TCS already deducted or collected are generally considered while determining the remaining advance-tax liability. Who Has to Pay Advance Tax? Under the existing framework, advance tax generally applies when the estimated tax payable for the year is ₹10,000 or more, after considering the applicable tax credits and subject to prescribed exceptions. For example, senior citizens who do not have income from business or profession may be eligible for an exemption from advance-tax payment under the applicable provisions. Businesses, professionals and individuals with significant non-salary income should therefore evaluate their estimated tax liability rather than assuming that TDS alone will cover their tax. Why Is 15 September 2026 Important? For taxpayers paying advance tax under the regular instalment system, the second instalment is due on 15 September 2026. The cumulative target by this date is generally: 45% of estimated annual advance-tax liability This is not an additional 45% payment on top of the June instalment. Instead, the taxpayer should calculate the total amount that should have been paid cumulatively by September and reduce the amount already paid. Example Suppose your estimated annual advance-tax liability is: ₹2,00,000 By 15 September, the cumulative amount should generally be: 45% × ₹2,00,000 = ₹90,000 If you already paid ₹30,000 in June, the September instalment would generally be: ₹90,000 − ₹30,000 = ₹60,000 The actual calculation should also account for changes in estimated income and applicable TDS/TCS credits. Advance Tax Instalment Schedule For taxpayers following the regular advance-tax payment schedule, the cumulative targets are generally: Due Date Cumulative Advance Tax 15 June 15% 15 September 45% 15 December 75% 15 March 100% For taxpayers covered by certain presumptive taxation provisions, different payment rules can apply. The important September target is therefore 45% cumulatively by 15 September. How to Calculate Advance Tax for September 2026 Calculating advance tax should start with an updated estimate of your full-year taxable income. Step 1: Estimate Your Total Income Calculate your expected income for the relevant tax year. Include: Business profits Professional receipts Salary income Rental income Interest income Capital gains Dividend income Other taxable receipts Do not calculate advance tax only from your business turnover. The calculation should be based on the applicable taxable income after considering relevant deductions and provisions. Step 2: Calculate Estimated Tax Liability Apply the relevant tax rates and provisions to your estimated taxable income. Your tax calculation may depend on: Applicable tax regime Type of income Applicable deductions Rebates Surcharge Health and education cess Other applicable provisions Step 3: Reduce TDS and TCS If tax has already been deducted or collected during the year, consider the available TDS/TCS credit while calculating the remaining advance-tax liability. For example: Estimated tax liability: ₹3,00,000 Expected TDS/TCS: ₹1,00,000 Estimated balance: ₹3,00,000 − ₹1,00,000 = ₹2,00,000 The advance-tax instalments are then calculated with reference to the remaining liability, subject to the applicable rules. Step 4: Reduce Advance Tax Already Paid If you have already paid an advance-tax instalment, subtract it from the cumulative amount due. Step 5: Calculate the September Instalment The September payment should bring cumulative advance tax to the applicable 45% level. September Advance Tax Calculation Example Consider a business owner who estimates: Annual taxable income: ₹12,00,000 Suppose the estimated final tax liability after applicable calculations is: ₹2,00,000 Assume expected TDS/TCS credit is: ₹20,000 Remaining advance-tax liability: ₹2,00,000 − ₹20,000 = ₹1,80,000 The cumulative amount required by 15 September would generally be: 45% × ₹1,80,000 = ₹81,000 If ₹27,000 was already paid in June: ₹81,000 − ₹27,000 = ₹54,000 So, approximately ₹54,000 would need to be paid in September to reach the 45% cumulative target, assuming the estimates and credits remain unchanged. What If Your Income Changes After June? This is extremely important for businesses and professionals. Advance tax is based on estimated income, so the calculation should be updated when your financial position changes significantly. For example, suppose a business initially estimated annual taxable income of ₹8 lakh but later expects ₹15 lakh because of: Higher sales New contracts Capital gains Increased professional receipts Higher interest income The taxpayer should revise the estimated tax liability rather than continuing to make instalments based on the old estimate. What Is Section 234C? For FY 2025–26 / AY 2026–27, Section 234C of
