TL;DR

The second instalment of Advance Tax for Tax Year 2026–27 is due on 15 September 2026. By this date, taxpayers liable to pay advance tax generally need to have paid at least 45% of their estimated annual advance-tax liability, after considering amounts already paid in earlier instalments. The Income Tax Department confirms the 15 June, 15 September, 15 December and 15 March instalment framework.

The Income Tax Act, 2025 applies to advance tax for Tax Year 2026–27. The threshold remains ₹10,000 or more of tax payable during the year, after considering the applicable provisions.

The new Act has reorganised the advance-tax provisions without changing the underlying policy. Section 405 provides the advance-tax computation formula, while Section 424 corresponds to old Section 234B for default in payment of advance tax and Section 425 corresponds to old Section 234C for deferment of instalments. The interest rates remain unchanged.

Introduction

September is an important month for taxpayers with income that is not completely covered by TDS.

Business owners, professionals, freelancers, consultants, investors, landlords and other taxpayers may have additional tax liability during the year. Instead of paying the entire tax at the end of the financial year, the advance-tax system requires eligible taxpayers to pay tax progressively during the year.

For Tax Year 2026–27, the second advance-tax instalment becomes due on 15 September 2026.

The key requirement is the 45% cumulative payment rule.

This means that by 15 September, the taxpayer should generally have paid at least 45% of the estimated annual advance-tax liability, after reducing the amount already paid in the first instalment.

Understanding this calculation is important because an insufficient instalment can result in interest for deferment of advance tax.

What Is Advance Tax?

Advance tax is income tax paid during the financial year instead of waiting until the end of the year to pay the entire liability.

It is particularly relevant when tax is payable on income where TDS or TCS does not fully cover the final tax liability.

Examples include:

• Business income
• Professional income
• Freelance income
• Rental income
• Interest income
• Capital gains
• Dividend income
• Other taxable income not adequately covered by TDS

Under the new Income Tax Act, 2025, the advance-tax threshold remains ₹10,000 or more of tax payable during the year under the applicable advance-tax provisions.

Why Is 15 September 2026 Important?

The 15 September 2026 deadline represents the second advance-tax instalment for Tax Year 2026–27.

The cumulative payment target by this date is 45% of the estimated annual advance tax.

The important word is cumulative.

You do not necessarily have to pay 45% again in September.

Instead, you calculate the total advance tax required up to September and subtract the amount already paid in June.

Example

Suppose your estimated annual advance-tax liability is ₹2,00,000.

By September, 45% should have been paid:

₹2,00,000 × 45% = ₹90,000

If you already paid ₹30,000 in June, your September instalment would generally be:

₹90,000 − ₹30,000 = ₹60,000

Therefore, your cumulative advance tax after the September payment becomes ₹90,000.

The official Income Tax Department guidance confirms the 45% cumulative requirement for the second instalment.

Advance Tax Due Dates for Tax Year 2026–27

The regular advance-tax schedule is based on cumulative percentages.

15 June 2026 – First Instalment

Taxpayers generally need to pay at least 15% of the estimated annual advance-tax liability by 15 June.

15 September 2026 – Second Instalment

By 15 September, cumulative advance-tax payment should generally reach 45%.

15 December 2026 – Third Instalment

By 15 December, cumulative payment should generally reach 75%.

15 March 2027 – Final Instalment

By 15 March, the taxpayer should generally have paid 100% of the advance-tax liability.

The notified 2026 tax rules retain this instalment structure.

Advance Tax September 2026: How to Calculate the 45% Payment

Calculating the September instalment requires estimating your total tax liability for Tax Year 2026–27.

A simplified calculation can be approached as follows.

Step 1: Estimate Your Total Annual Income

Start by estimating all taxable income expected during the year.

This may include:

• Salary
• Business income
• Professional receipts
• Interest
• Rental income
• Capital gains
• Dividend income
• Other taxable receipts

Step 2: Calculate the Estimated Tax

Apply the relevant tax rates and applicable provisions to your estimated taxable income.

The calculation should also consider applicable deductions, exemptions, surcharge and cess where relevant.

Step 3: Reduce TDS and TCS

Estimate the TDS and TCS that will actually be available as credit.

This is important because advance tax is not calculated simply on gross income.

If sufficient TDS is already being deducted, the remaining advance-tax liability may be lower.

Step 4: Determine Advance-Tax Liability

After considering applicable tax credits, determine the estimated advance-tax amount payable for the year.

Step 5: Calculate 45%

Multiply the estimated annual advance-tax liability by 45%.

Step 6: Subtract Advance Tax Already Paid

Finally, subtract the amount already paid in the June instalment.

The resulting amount is generally the amount required to bring cumulative advance-tax payment to the September target.

Example of September Advance Tax Calculation

Suppose a professional estimates the following for Tax Year 2026–27:

Estimated total tax liability: ₹3,00,000

Estimated TDS/TCS credit: ₹50,000

Therefore:

Estimated advance-tax liability = ₹3,00,000 − ₹50,000 = ₹2,50,000

The September cumulative requirement is:

₹2,50,000 × 45% = ₹1,12,500

If ₹37,500 was already paid in June:

September payment = ₹1,12,500 − ₹37,500 = ₹75,000

After paying ₹75,000 in September, cumulative advance tax becomes ₹1,12,500.

Who Needs to Pay Advance Tax?

Advance tax generally applies when the taxpayer’s estimated tax payable for the year reaches the prescribed threshold after considering relevant tax credits.

It can affect:

Business Owners

Business owners may have substantial tax liability that is not fully covered by TDS.

Freelancers and Consultants

Professionals receiving payments with limited or insufficient TDS may need to estimate their annual tax liability.

Investors

Large capital gains, dividend income or interest income can create additional tax liability.

Landlords

Rental income can create tax liability beyond the TDS deducted by other income sources.

Salaried Individuals

Salaried taxpayers are often covered substantially through employer TDS, but advance tax can still become relevant when they have significant additional income.

The Income Tax Department specifically notes that interest, rental income, bonds and capital gains can increase tax liability even for salaried taxpayers.

Advance Tax Under the New Income Tax Act, 2025

Tax Year 2026–27 is significant because the Income Tax Act, 2025 applies to income for this tax year.

The advance-tax provisions have been reorganised to make them easier to follow, but the Income Tax Department states that there are no policy changes to the advance-tax provisions. A computation formula has been provided under Section 405.

This distinction is important for taxpayers searching for advance-tax information under both the old and new laws.

Old vs New Section Numbers for Advance Tax

Because the Income Tax Act, 2025 reorganises the provisions, taxpayers may encounter both old and new section numbers online.

For advance tax, the key mapping includes:

Section 404 – Threshold for Advance Tax

Under the new Act, Section 404 provides the threshold for advance-tax liability.

The threshold remains ₹10,000 or more.

Section 405 – Computation of Advance Tax

Section 405 provides the formula for computing advance-tax liability under the new Act.

Section 424 – Default in Payment of Advance Tax

New Section 424 corresponds broadly to old Section 234B.

It deals with interest for default in payment of advance tax or where advance tax paid is insufficient in the circumstances specified by law.

Section 425 – Deferment of Advance-Tax Instalments

New Section 425 corresponds to old Section 234C.

It deals with interest arising from deferment or short payment of prescribed advance-tax instalments.

This new-versus-old section mapping is particularly useful when researching advance-tax rules because many older tax articles continue to refer to Sections 234B and 234C.

Section 424: Interest for Default in Advance Tax

Under the new Income Tax Act, Section 424 corresponds to Section 234B of the old Act.

Interest generally applies at 1% per month or part of a month for the specified period where the conditions relating to advance-tax default are satisfied.

One important situation is where the advance tax paid is less than 90% of assessed tax.

The Income Tax Department confirms that the interest rate under the new Act remains unchanged from the old provisions.

Section 425: Interest for Deferment of Advance Tax

Section 425 corresponds to old Section 234C.

This provision deals with deferment of advance-tax instalments.

The interest rate can be 1% or 3% for the specified period, depending on the applicable category and nature of the shortfall.

This is why taxpayers should not simply calculate the total annual tax at the end of the year.

They also need to monitor whether the required cumulative instalments were paid on time.

Difference Between Section 424 and Section 425

The distinction can be understood simply.

Section 424 – Old Section 234B

This primarily concerns default in payment of advance tax, including situations where the advance tax paid is less than the required level relative to assessed tax.

Section 425 – Old Section 234C

This concerns deferment or short payment of individual advance-tax instalments.

A taxpayer can therefore face interest consequences under different provisions depending on the nature of the advance-tax shortfall.

Special Rule for Presumptive Taxation

Taxpayers using eligible presumptive taxation provisions have a different advance-tax schedule.

For taxpayers opting for presumptive taxation under provisions such as Section 44AD or 44ADA, the entire advance-tax liability is generally payable by 15 March of the relevant financial year.

The Income Tax Department confirms that taxpayers under Section 44ADA are required to pay 100% of their advance tax by 15 March, subject to the applicable provisions.

Therefore, the regular 15%–45%–75%–100% instalment structure should not automatically be applied to every presumptive-tax taxpayer.

What Happens If You Pay Less Than 45% by 15 September?

Suppose your estimated advance-tax liability is ₹4 lakh.

By 15 September, the cumulative target would generally be:

₹4,00,000 × 45% = ₹1,80,000

If you have paid only ₹1,20,000 by that date, there is a shortfall of:

₹1,80,000 − ₹1,20,000 = ₹60,000

Depending on the circumstances and applicable provisions, this shortfall can result in interest for deferment under Section 425.

Therefore, taxpayers should review their September payment before the due date rather than waiting until year-end.

Can Advance Tax Be Recalculated During the Year?

Yes.

Advance tax is based on estimated income.

Your actual income may change during the financial year.

For example, you may:

• Receive an unexpected business contract
• Sell shares at a profit
• Receive a large professional payment
• Earn higher interest income
• Sell property
• Receive additional rental income

In such situations, the estimated tax liability should be reassessed.

If your tax liability increases, the later advance-tax instalments can be adjusted accordingly.

How to Pay Advance Tax in September 2026

Advance tax for Tax Year 2026–27 falls under the new Income Tax Act, 2025. The Income Tax Department confirms that payments relating to Tax Year 2026–27 should be made under the new Act.

Before making payment, taxpayers should carefully select the relevant tax-payment category and ensure that the amount is calculated correctly.

After payment, retain the challan/payment confirmation and ensure that the payment is properly reflected in your tax records.

Common Advance Tax Mistakes to Avoid

Mistake 1: Calculating 45% on Gross Income

The 45% requirement relates to the advance-tax liability, not simply 45% of your gross income.

Mistake 2: Forgetting TDS

TDS and TCS credits should be considered while estimating the remaining tax payable.

Mistake 3: Paying 45% Again in September

The requirement is cumulative.

If 15% was already paid in June, you generally need to pay only enough in September to bring the cumulative payment to 45%.

Mistake 4: Ignoring Capital Gains

Capital gains can significantly increase your annual tax liability.

Mistake 5: Ignoring Interest Income

FD interest, savings interest, bonds and other interest income can create additional tax liability.

Mistake 6: Using Old Section Numbers Without Checking the New Act

For Tax Year 2026–27, taxpayers should understand the new provisions, including Sections 404, 405, 424 and 425, while recognising their relationship to the older provisions.

Mistake 7: Waiting Until March

Waiting until the final instalment can result in avoidable interest where earlier instalment requirements were not met.

Why September Advance Tax Planning Matters

The September instalment provides an opportunity to reassess your tax position before the end of the financial year.

At this stage, taxpayers still have several months to identify changes in income and adjust future payments.

A proper review can help you:

• Estimate annual tax liability
• Account for TDS/TCS
• Include capital gains
• Adjust for business income changes
• Avoid unnecessary interest
• Plan December and March instalments
• Maintain better tax compliance

How a Chartered Accountant Can Help With Advance Tax

Advance-tax calculation can become complicated when income comes from multiple sources.

A Chartered Accountant can help estimate taxable income, calculate applicable tax, reconcile TDS/TCS, account for capital gains, determine advance-tax instalments and review potential interest exposure.

For businesses and professionals, periodic tax reviews can also help ensure that advance-tax payments remain aligned with actual income throughout the year.

Conclusion

The 15 September 2026 Advance Tax deadline is an important compliance date for taxpayers with significant tax liability not fully covered through TDS or TCS.

For Tax Year 2026–27, taxpayers generally need to achieve 45% cumulative advance-tax payment by 15 September, after considering the amount already paid in June.

The new Income Tax Act, 2025 applies to advance tax for Tax Year 2026–27. While the provisions have been reorganised, the Income Tax Department confirms that the underlying advance-tax policy and interest rates remain unchanged. Section 424 corresponds to old Section 234B, while Section 425 corresponds to old Section 234C.

If your income has changed during the year, especially because of business profits, professional receipts, capital gains, interest or rental income, reassess your advance-tax liability before making the September payment.

Frequently Asked Questions

What is the advance tax due date in September 2026?

The second advance-tax instalment for Tax Year 2026–27 is due on 15 September 2026.

How much advance tax is payable by 15 September 2026?

By 15 September, taxpayers generally need to have paid at least 45% of their estimated annual advance-tax liability cumulatively.

Is the 45% payment additional to the June instalment?

No. The 45% requirement is cumulative. The amount already paid in June is reduced when calculating the September instalment.

What is the advance-tax threshold in 2026?

Under Section 404 of the Income Tax Act, 2025, advance tax is generally applicable where tax payable during the year is ₹10,000 or more, subject to the applicable provisions.

What is Section 424 of the Income Tax Act, 2025?

Section 424 deals with interest for default in payment of advance tax and corresponds to Section 234B of the Income Tax Act, 1961.

What is Section 425 of the new Income Tax Act?

Section 425 deals with interest for deferment of advance-tax instalments and corresponds to Section 234C of the old Act.

What is the interest rate under Section 424?

The applicable interest rate is generally 1% per month or part of a month for the specified period, subject to the conditions under the provision.

Can salaried employees be required to pay advance tax?

Yes. If salary TDS does not fully cover the tax liability and the taxpayer has sufficient additional income, advance tax may become applicable.

Do freelancers need to pay advance tax?

Yes, where the applicable tax liability crosses the advance-tax threshold. Freelancers and professionals should estimate their annual income and account for TDS before calculating advance tax.

Is there a special advance-tax rule for presumptive taxation?

Yes. Eligible taxpayers under presumptive taxation provisions such as Section 44AD/44ADA generally pay the entire advance tax by 15 March, subject to the applicable rules.

Can I change my advance-tax estimate later?

Yes. Since advance tax is based on estimated income, taxpayers should reassess their liability when their income changes significantly during the year.

What happens if I miss the September advance-tax payment?

A shortfall can result in interest under the applicable provisions, particularly the provisions dealing with deferment of advance-tax instalments. Therefore, taxpayers should calculate and pay the required amount as early as possible.

Note: Advance-tax calculations depend on the taxpayer’s income, tax regime, TDS/TCS, deductions, capital gains and other circumstances. The above information is for Tax Year 2026–27 and reflects the Income Tax Department’s current guidance on the Income Tax Act, 2025.

 

Blog By : CA Junaid Khan

 

Written by CA Junaid Ahmed Khan, Junaid Khan & Co., Bhopal.