Updated 14 September 2026: now covers all four Tax Year 2026-27 installments, and the interest examples apply the Rs 100 rounding in Income-tax Rules 2026, Rule 269.
Tax Year 2026-27 (income earned 1 April 2026 to 31 March 2027) is the first year of advance tax under the Income-tax Act 2025. Advance tax falls due in four installments: 15% by 15 June 2026, 45% by 15 September 2026, 75% by 15 December 2026 and 100% by 15 March 2027 (Act 2025 Sec 408(1)). You owe it if your tax payable after TDS is Rs 10,000 or more (Sec 404). Salaried earners with FD interest, rental income, or capital gains are the most common miss case. Sec 425(2) gives safe-harbor floors for the first two installments only, each tested on its own: paying at least 12% by 15 June avoids June deferment interest, and paying at least 36% by 15 September avoids September deferment interest. Pay via the e-pay tax portal, selecting Tax Year 2026-27 (not AY) under Act 2025. Not financial advice.
Quick Facts
| Item | Detail |
|---|---|
| Installment due dates | 15 June 2026, 15 September 2026, 15 December 2026, 15 March 2027 |
| Cumulative targets (Sec 408(1)) | 15%, 45%, 75% and 100% of estimated total liability |
| Safe-harbor floors (Sec 425(2)) | 12% of tax due on returned income by 15 June; 36% by 15 September; none for December or March |
| Threshold for advance tax (Sec 404) | Rs 10,000 of tax payable for the year |
| Governing Act | Income-tax Act 2025 (Tax Year 2026-27 is its first advance tax year) |
| Computation section | Sec 405: A = B - C (B = income-tax on the specified sum at rates in force; C = tax deductible or collectible at source during the financial year under any provision of the Act) |
| Shortfall interest (Sec 424) | 1% per month, triggers if advance tax paid < 90% of assessed tax, charged on the full shortfall (assessed tax minus advance tax paid); period starts 1 April 2027 |
| Deferment interest (Sec 425) | 3% on shortfall at 15 June / 15 Sep / 15 Dec; 1% on 15 March shortfall |
| Interest rounding (Income-tax Rules 2026, Rule 269) | The shortfall is rounded down to a multiple of Rs 100 before interest is calculated |
| Cess | 4% Health and Education Cess (Finance Act 2026 First Schedule) on (tax + surcharge if applicable) |
| Tax rounding (Sec 516) | Tax payable rounded to nearest Rs 10, ignoring paise |
| Payment portal | incometax.gov.in e-pay tax; select Tax Year 2026-27 |
| Carve-out (Sec 403(3)) | Resident senior citizen with no business or professional income |
Do you owe advance tax for Tax Year 2026-27?
Five-question decision flow.
Q0 (gating). Are you a presumptive taxpayer under Act 2025 Sec 58(2) Table Sl. No. 1 (eligible business; 1961 Sec 44AD legacy) or Sl. No. 3 (specified profession per Sec 62(4); 1961 Sec 44ADA legacy)? If YES, you have no June, September or December installment. You still owe full advance tax, but Sec 408(2) requires payment in one lump sum by 15 March 2027, and Sec 425(3) charges 1% interest on any shortfall at that date. Skip to "When the regular installments do not apply" below. Goods-carriage operators (Sec 58(2) Sl. No. 2; 1961 Sec 44AE legacy) follow the regular installment schedule.
Q1. Is your salary TDS sufficient? If your employer is deducting TDS on the full salary using the right regime (new vs old) and Form 12BB declarations, your salary-only liability is covered. Move to Q2 to check other income.
Q2. Do you earn FD interest above your bank's TDS threshold? Banks deduct TDS on FD interest above the bank's threshold under Sec 393 (successor to 1961 Sec 194A); check your bank's TDS notice for the threshold applicable to your account class. If your interest sits below threshold (no bank TDS) or is split across banks below per-bank threshold, you owe the tax yourself. Move to Q3.
Q3. Have you realised capital gains during the tax year? Gains realised after an installment date have their own interest exception (Sec 425(4), below). Listed-equity short-term capital gains are taxed at 20% under Act 2025 Sec 196 (successor to 1961 Sec 111A). Listed-equity LTCG above Rs 1,25,000 per year is taxed at 12.5% under Act 2025 Sec 198 (successor to 1961 Sec 112A). For resident investors selling listed equity on a broker, no broker TDS is withheld on the gain (unlike FD interest), so the entire liability sits with you. NRI sellers, property sellers, and certain platform transactions have separate TDS regimes (Sec 195, Sec 194-IA equivalents) outside this post's scope. Move to Q4.
Q4. Do you have rental income from commercial property, professional fees outside Sec 58 presumptive scope, or any other income with TDS that does not match your slab? If yes, you likely owe.
Compute residual tax payable using Sec 405: A = B - C where B is income tax on the specified sum (including cess) at rates in force in the financial year, and C is tax deductible or collectible at source during the full financial year under any provision of the Act (not only TDS already deducted in the months before the installment due date - estimate the FY-total TDS that will be withheld, including months yet to come). If A is Rs 10,000 or more, you owe advance tax. Use the Income Tax Calculator to estimate B.
DesiUtils toolIncome Tax CalculatorEstimate your total liability and the residual you owe as advance taxHow to calculate each installment
Worked example.
Inputs:
- Rs 18 LPA salaried (employer TDS fully covers salary tax liability per Form 16)
- Rs 4,00,000 listed-equity STCG realised 10 May 2026 (before 15 June)
- No FD / rental / other side income
- Total taxable income: Rs 22,00,000 (below Rs 50L surcharge threshold)
Tax on Rs 4L STCG (Act 2025 Sec 196, 20% on listed-equity STCG):
- STCG tax = Rs 4,00,000 × 20% = Rs 80,000
- Surcharge = Rs 0 (total income Rs 22L below Rs 50L threshold)
- Cess (Finance Act 2026, 4% on tax + surcharge) = 4% × Rs 80,000 = Rs 3,200
- Total residual liability = Rs 80,000 + Rs 0 + Rs 3,200 = Rs 83,200
Cumulative amount due by each installment date:
- 15 June 2026 (15%): 15% × Rs 83,200 = Rs 12,480; safe-harbor floor (Sec 425(2), 12%) = Rs 9,984
- 15 September 2026 (45%): 45% × Rs 83,200 = Rs 37,440; safe-harbor floor (Sec 425(2), 36%) = Rs 29,952
- 15 December 2026 (75%): 75% × Rs 83,200 = Rs 62,400; no safe-harbor floor
- 15 March 2027 (100%): Rs 83,200; no safe-harbor floor
The installment schedule in Sec 408(1) asks for cumulative payments of at least Rs 12,480 by 15 June, Rs 37,440 by 15 September and Rs 62,400 by 15 December, and the full Rs 83,200 by 15 March. June and September also have a safe-harbor floor under Sec 425(2): there is no deferment interest for those installments if the total paid reaches at least Rs 9,984 by 15 June or Rs 29,952 by 15 September. December and March have no floor, so meet their scheduled targets. The four targets are multiples of Rs 10. The floors are not, and they are thresholds, so never round one down (Rs 9,980 would fall short of Rs 9,984): pay at least Rs 9,990 by 15 June and Rs 29,960 by 15 September. The floors are also measured against the tax on the income you finally declare in your return, not your estimate, so leave a margin if your estimate may be low.
The four installments through 15 March 2027
Per Act 2025 Sec 408(1) for non-presumptive assessees:
| Installment | Due date | Cumulative target | Safe-harbor floor (Sec 425(2)) |
|---|---|---|---|
| First | 15 June 2026 | 15% | 12% |
| Second | 15 September 2026 | 45% | 36% |
| Third | 15 December 2026 | 75% | No Sec 425(2) safe-harbor floor (target itself binds) |
| Fourth | 15 March 2027 | 100% | No Sec 425(2) safe-harbor floor (target itself binds) |
Sec 425(2) provides safe-harbor floors only for the first two installments (June at 12% and September at 36%). The December and March nominal targets stand on their own; any shortfall below 75% by 15 December or 100% by 15 March triggers Sec 425 deferment interest at the relevant rate.
Sec 408(3): "Any amount paid by way of advance tax on or before the 31st March, shall be treated as advance tax paid during the financial year ending on that day."
Interest if you miss or underpay
Two separate interest sections apply.
Sec 425 - deferment interest, per installment. Rate: 3% on shortfall at the 15 June / 15 September / 15 December installments; 1% on shortfall at the 15 March installment (Income Tax FAQ Q20).
Rounding (Income-tax Rules 2026, Rule 269). Before the interest is worked out, the shortfall is rounded down to a multiple of Rs 100: any part of Rs 100 is ignored.
Three scenarios for the 15 June installment in our worked example (Rs 12,480 nominal / Rs 9,984 safe-harbor floor):
- Scenario A (safe-harbor compliance): Pay Rs 10,000 by 15 June. Above the 12% floor (Rs 9,984), so no Sec 425 interest applies to the June installment. The remaining liability is owed in subsequent installments per the cumulative schedule.
- Scenario B (below floor): Pay Rs 8,000 by 15 June. Below the 12% floor. Sec 425(1) interest applies on the shortfall from the nominal Rs 12,480 target. Shortfall = Rs 12,480 - Rs 8,000 = Rs 4,480, rounded down to Rs 4,400 under Rule 269. Interest = 3% × Rs 4,400 = Rs 132.
- Scenario C (zero payment): Pay Rs 0 by 15 June. Shortfall = Rs 12,480, rounded down to Rs 12,400 under Rule 269. Sec 425(1) interest = 3% × Rs 12,400 = Rs 372.
Sec 425(4) capital-gains exception. If you realise capital gains AFTER an installment due date, Sec 425(4) protects you from Sec 425(1) or (3) deferment interest on the part of that installment's shortfall caused by the gain. The payment condition, in the Act's own words, is that the assessee "has paid in full, the tax payable on the said income had such income been part of total income, in any of the remaining instalments of advance tax, if any, or by the 31st day of March of the tax year." A shortfall caused by other income, such as salary, FD interest or rent, is not covered. The exception also covers Sec 2(49)(n) income, first-time business/profession income, and dividend income, not just capital gains.
For example, suppose the same Rs 4L STCG is realised on 20 June 2026 (instead of 10 May) and nothing was paid by 15 June, so the June shortfall of Rs 12,480 is caused by the gain. You then pay Rs 37,440 in total by 15 September, Rs 62,400 by 15 December and the full Rs 83,200 by 15 March 2027. That full payment of the tax on the gain meets the condition above, so Sec 425(4) removes the deferment interest on the June shortfall. Reaching the September target alone would not meet that condition.
Our recommendation (not a legal condition): start paying the tax on a gain from the next installment after you realise it, as the example does from 15 September. The Act's wording does not spell out that timing, but paying on schedule avoids any question about deferment interest on the later installments.
Important caveat: Sec 425(4) protects only from Sec 425 deferment interest. It does NOT exempt you from Sec 424 year-end shortfall interest if your total advance tax paid by year-end is still less than 90% of assessed tax.
Sec 424 - year-end shortfall interest. Triggers if advance tax paid through the year is less than 90% of assessed tax (Income Tax FAQ Q20). Rate: 1% per month or part of a month on the full shortfall (assessed tax minus advance tax paid), not just the part below 90%. Period: from 1 April 2027 (for Tax Year 2026-27) until self-assessment payment date.
Example: Year-end self-assessment for TY 2026-27 shows total advance tax paid was 85% of assessed tax. Because 85% is below 90%, Sec 424 interest applies on the full 15% shortfall (rounded down to a multiple of Rs 100 under Rule 269), at 1% per month or part of a month from 1 April 2027 until you settle the residual at self-assessment.
DesiUtils toolTDS CalculatorEstimate TDS on FD interest, salary, and other income to check your Sec 405 residualHow to pay - e-pay tax portal walkthrough
The e-pay tax portal at incometax.gov.in handles both Acts in parallel during the transition window. Critical difference for 2026 (quoted from the Income Tax Department Tax Payments FAQ, Q22):
"Example: For self-assessment tax for FY 2025-26 paid in June 2026 - taxpayer will select AY 2026-27. For advance tax on income earned during April 2026 to March 2027 - taxpayer will select Tax Year 2026-27."
Step-by-step for any Tax Year 2026-27 installment:
- Log in at incometax.gov.in (PAN-based login).
- e-Pay Tax, then New Payment.
- Choose the Income Tax option for Tax Year 2026-27 onwards (challan ITNS 280N), then Advance Tax (Minor Head 100).
- Select Tax Year 2026-27 (not Assessment Year 2027-28 - the AY concept is discontinued under Act 2025 for current-year filings).
- Enter the amount for the installment you are paying: the cumulative target minus advance tax you have already paid. In our example, if every earlier target was paid in full, that is Rs 12,480 by 15 June, a further Rs 24,960 by 15 September, Rs 24,960 by 15 December and Rs 20,800 by 15 March; after Scenario A's Rs 10,000 in June, September needs Rs 27,440 to reach its Rs 37,440 target.
- Confirm and pay via NetBanking, debit card, or UPI.
- Save the challan (CIN) for your records and ITR cross-check.
Common error: booking the payment to the wrong year. The portal runs both Acts side by side this year: Assessment Year 2026-27 is for FY 2025-26 payments under the 1961 Act, while advance tax on income earned from April 2026 goes under Tax Year 2026-27. The Tax Payments FAQ (Q22) asks taxpayers to select the right one so that tax credit is granted in the correct year.
When the regular installments do not apply
Two carve-outs.
(a) Resident senior citizen with no business or professional income. Per Act 2025 Sec 403(3), advance tax does not apply to "an individual resident in India who (a) does not have any income chargeable under the head ‘Profits and gains of business or profession’; and (b) is of the age of sixty years or more at any time during the tax year." If you have any business or professional income (44ADA presumptive included), this carve-out does NOT apply.
(b) Presumptive taxpayers under Sec 58(2) Sl. No. 1 or Sl. No. 3. Per Sec 408(2): "An assessee, who declares profits and gains as per the provisions of section 58(2) (Table: Sl. No. 1 or 3), shall pay the whole amount of advance tax on the current income, calculated in the manner laid down in section 405 during each financial year, on or before the 15th March." Sl. No. 1 = eligible business (1961 Sec 44AD legacy); Sl. No. 3 = specified profession per Sec 62(4) (1961 Sec 44ADA legacy). Goods-carriage operators (Sl. No. 2; 1961 Sec 44AE legacy) follow the regular installment schedule under Sec 408(1), not Sec 408(2).
Sources
- Income-tax Act 2025, Section 196 (STCG on STT-linked listed equity / equity-oriented funds / business trusts at 20%): incometaxindia.gov.in
- Income-tax Act 2025, Section 198 (LTCG above Rs 1,25,000 at 12.5% on STT-linked listed equity etc): incometaxindia.gov.in
- Income-tax Act 2025, Section 403(3) (resident senior citizen carve-out): incometaxindia.gov.in
- Income-tax Act 2025, Section 404 (Rs 10,000 advance tax threshold): incometaxindia.gov.in
- Income-tax Act 2025, Section 405 (computation formula A = B - C): incometaxindia.gov.in
- Income-tax Act 2025, Section 408 (installment schedule + Sec 408(2) presumptive 15 March): incometaxindia.gov.in
- Income-tax Act 2025, Section 424 (shortfall interest 1% pm, < 90% trigger, period from 1 April): incometaxindia.gov.in
- Income-tax Act 2025, Section 425 (deferment interest 3% / 1% + Sec 425(2) safe harbors + Sec 425(4) exceptions): incometaxindia.gov.in
- Income-tax Act 2025, Section 516 (rounding to nearest Rs 10): incometaxindia.gov.in
- Income-tax Act 2025, Section 58 (presumptive taxation + Sec 58(2) Table row labels): incometaxindia.gov.in
- Income-tax Rules 2026, Rule 269 (procedure for calculating interest; the amount is rounded down to a multiple of Rs 100): incometaxindia.gov.in/income-tax-rule-2026
- Finance Act 2026, First Schedule (4% Health and Education Cess): indiabudget.gov.in
- Income Tax Department - Tax Payments page (e-Pay tax portal Tax Year 2026-27 selection, quoted from its FAQ Q22): incometax.gov.in/iec/foportal/help/all-topics/e-filing-services/tax-payments
- Income Tax Department - Tax Payments FAQ (Q17, Q19, Q20, Q22 on Sec 404 / Sec 408(2) / Sec 424 / Sec 425 / Tax Year selection; re-checked 14 September 2026): incometax.gov.in/iec/foportal/help/all-topics/e-filing-services/tax-payments-faq
- Income Tax Department - Objective and Scope of New Act FAQ (AY concept discontinuation): incometax.gov.in/iec/foportal/help/all-topics/e-filing-services/objective-and-scope-new-act-faq
- Income Tax Department - Create Challan user manual (challan ITNS 280N for Tax Year 2026-27 onwards; Advance Tax, Minor Head 100): incometax.gov.in/iec/foportal/help/all-topics/e-filing-services/create-challan-pan-login-UM