Advance Tax Is Due on 15 September. Who Pays, and Who Gets a Free Pass

A deadline most salaried Indians have never had to think about#

On Tuesday 15 September, the second instalment of advance tax for tax year 2026-27 falls due. If you draw a salary and nothing else, you can almost certainly ignore it. Your employer has been deducting tax every month since April, and that is the same thing by another name.

Everyone else should look at the date properly. Sell a flat in July, take on three consulting clients, let out a second property, book a large capital gain on a listed stock, and you become responsible for paying tax on your own timetable rather than someone else's. By 15 September, 45% of your estimated tax for the whole year is supposed to have already reached the government.

Advance tax collections up to 17 June 2026 came to about ₹1.78 lakh crore, 15.30% higher than a year earlier. Of that, ₹1,40,753 crore came from companies and ₹37,620 crore from everyone else, meaning individuals, Hindu Undivided Families and partnership firms. Non-corporate taxpayers put in roughly a fifth of the June instalment, which says something about how thinly this obligation is spread across a country of crores of earners.

There is a second reason to pay attention this year. This is the first September instalment under the Income-tax Act, 2025, which replaced the 1961 Act for income arising on or after 1 April 2026. The rules have barely moved. The section numbers have moved a great deal, and half the advice circulating online still quotes the old ones.

What advance tax is, and why the law wants your money early#

Advance tax is the pay-as-you-earn principle applied to income that nobody deducts tax from at source. Section 403 of the new Act puts it plainly: advance tax is payable during the tax year on the "current income" of the assessee, meaning the income of that same year rather than the one just finished.

Two pieces of vocabulary get in people's way.

The first is tax year. The 2025 Act scrapped the old pairing of "previous year" and "assessment year" and uses a single term. Tax year 2026-27 runs from 1 April 2026 to 31 March 2027. What you are estimating now is income you have not finished earning.

The second is estimate. Nobody expects precision in September. Section 405 states the sum as a formula, A = B − C, where B is the tax on your estimated income for the year and C is the tax deductible or collectible at source on that income. You are forecasting, and you are allowed to revise the forecast at every instalment.

The gate is Section 404: advance tax is payable "where the amount of such tax during that year, as computed under this Part, is ten thousand rupees or more". Below ₹10,000 after TDS, nothing is due, and the whole schedule falls away.

The ₹10,000 test, and the people it catches#

Run the test in three steps. Estimate your total income for the year to 31 March 2027. Compute tax on it at the rates for the regime you are in. Subtract the TDS and TCS you expect others to deduct. If what remains is ₹10,000 or more, you are in.

Under the default new regime for tax year 2026-27, income up to ₹4 lakh is untaxed, then 5% to ₹8 lakh, 10% to ₹12 lakh, 15% to ₹16 lakh, 20% to ₹20 lakh, 25% to ₹24 lakh and 30% above that, with a rebate of up to ₹60,000 under Section 202 taking tax to nil at total income of ₹12 lakh, and a ₹75,000 standard deduction that applies to salary but not to business or professional income.

The people who get caught are usually caught by the gap between the rate at which tax is deducted and the rate at which they actually owe it.

A consultant billing companies has 10% deducted under Section 393, the successor to Section 194J, once payments cross ₹50,000 in the year. If her income sits in the 20% or 30% band, that 10% falls well short of what she finally owes on those receipts. Dividends carry 10% TDS with no threshold at all, yet the income is taxed at your slab. Bank interest is deducted only above ₹50,000 a year, or ₹1,00,000 for senior citizens. Rent attracts TDS above ₹50,000 a month. Capital gains on listed shares attract none at all until you file.

Salaried people have an escape hatch that is easy to miss. If you declare your other income to your employer, the tax can be pulled into your monthly TDS and the advance tax obligation disappears with it. It is the same money, deducted by someone else, on a schedule you never have to remember.

Who gets a free pass, and who only thinks they do#

Three exemptions matter, and each has an edge that people fall off.

Start with age. Section 403(3) exempts an individual resident in India who is 60 or older at any time during the tax year and has no income under "Profits and gains of business or profession". A retired schoolteacher with a pension, fixed deposits, rental income and a share portfolio owes no advance tax at all, however large the final bill. She settles it as self-assessment tax when she files.

Both conditions are strict. Residence is required, so a 70-year-old NRI gets nothing from this provision. Business or professional income cancels the exemption in full rather than reducing it in proportion. The retired executive who takes two advisory retainers a year has traded the exemption for the retainers.

The second exemption is for presumptive taxpayers. Anyone declaring income under the scheme in Section 58, which took over from Sections 44AD and 44ADA, pays the entire year's advance tax in one instalment by 15 March. September passes them by. The scheme covers businesses with turnover up to ₹2 crore, or ₹3 crore where cash receipts are 5% or less of turnover, and professionals with gross receipts up to ₹50 lakh, or ₹75 lakh on the same cash condition. Income is deemed at 6% of digital receipts or 8% otherwise for businesses, and 50% of receipts for professionals.

The third is the ₹10,000 floor itself. It is arithmetic rather than a concession, but it is where most salaried taxpayers with a modest savings account sit.

There is also a partial pass that gets misread. Under Section 425, no deferment interest is charged where a shortfall arises because you underestimated capital gains, dividend income or profits from a business that began during the year, provided you pay the tax on that income in the remaining instalments or by 31 March. The law is not asking you to predict a windfall in June. It is asking you not to sit on it once it arrives. The relief covers the interest, never the tax.

The 45% maths, and what a missed instalment actually costs#

Section 408 sets four dates and four cumulative percentages. Section 425 then sets out where interest bites and where a tolerance saves you.

The 3% figures are simply 1% a month for three months, running to the next instalment date. The tolerance on the first two dates exists because early-year estimates are guesses.

Take a freelance designer expecting ₹16 lakh of professional income this year. Tax under the new regime works out at ₹1,20,000 plus 4% cess, or ₹1,24,800. Suppose clients deduct ₹60,000 of TDS over the year. Advance tax payable is ₹64,800, comfortably over the threshold. The June instalment was ₹9,720 and the cumulative September requirement is ₹29,160.

If he has paid nothing so far, Section 425 charges 3% on the June shortfall of ₹9,720, about ₹292, and 3% on the September shortfall of ₹29,160, about ₹875. Roughly ₹1,167 for skipping two deadlines on a ₹1.25 lakh tax bill.

That number is deliberately unexciting. Advance tax interest is compensation for the government's lost use of the money, not a penalty, and there is no prosecution attached to missing an instalment. What changes the arithmetic is Section 424, the old 234B, which charges 1% a month on the shortfall from 1 April 2027 onwards if your advance tax and TDS together come to less than 90% of the finally assessed tax. That clock does not stop at the filing deadline. It runs until the assessment is made. Ignore the whole year and the two provisions stack.

Paying it: fifteen minutes, and three ways to get it wrong#

Payment happens on the e-filing portal under e-File → e-Pay Tax → New Payment, choosing Income Tax, tax year 2026-27 and the minor head "Advance Tax (100)". The challan that comes back carries a BSR code and a serial number. Keep both; you will need them when you file.

Three mistakes recur. Selecting the wrong tax year sends the money to a year you have already settled. Selecting "Self-Assessment Tax (300)" instead of "Advance Tax (100)" puts it under the wrong head and the credit has to be corrected later. And a payment made under a family member's PAN credits that PAN, not yours.

One more thing worth knowing. In March 2026 the Income Tax Department ran an advance tax e-campaign and then issued a clarification that some taxpayers had received emails "containing inaccurate details regarding significant transactions", asking them to ignore those emails and check the e-Campaign tab on the Compliance Portal instead. These messages are reminders drawn from reported financial data. They are a prompt to check your own numbers, not a demand to be paid on sight.

If the deadline passes, pay as soon as you can rather than waiting for the December date. Interest runs by the month, and Section 408(3) treats anything paid up to 31 March as advance tax for the year, which keeps the Section 424 exposure down even when Section 425 has already been triggered.

Key takeaways#

1. By 15 September 2026, 45% of your estimated tax for tax year 2026-27 must have been paid, less what you have already paid in June.
2. The gate is ₹10,000 of tax after TDS and TCS, under Section 404 of the Income-tax Act, 2025.
3. Resident individuals aged 60 or above with no business or professional income are exempt outright under Section 403(3). Residence and the absence of business income are both required.
4. Presumptive taxpayers under Section 58 pay the entire year's advance tax in one instalment by 15 March 2027 and owe nothing in September.
5. Interest for a missed instalment is 3% of the shortfall, which is modest, but Section 424 adds 1% a month from April 2027 if the year's payments fall below 90% of the assessed tax.

Frequently asked questions#

I am salaried and my employer deducts TDS. Do I need to do anything? Usually not, if salary is your only income. If you also have interest, rent, dividends or capital gains, either declare that income to your employer so it is covered by monthly TDS, or run the ₹10,000 test yourself.

I sold shares in August. Does that change my September instalment? Yes. The gain is part of your current income, so it should be reflected in the 45% you pay by 15 September. If you miss it, Section 425 does not charge deferment interest on an underestimated capital gain as long as you pay the tax on it in a later instalment or by 31 March 2027.

What if I overpay? The excess comes back as a refund after you file, with interest where the law provides for it. Overpaying is not penalised, though the money is out of your hands until the return is processed.

My income is irregular. How can I possibly estimate it? You are not expected to be exact. Use your best forecast at each date and revise it at the next one. The 12% and 36% tolerances on the June and September instalments exist for precisely this reason.

Are senior citizens with business income really excluded from the exemption? Yes. Section 403(3) requires that the individual has no income under "Profits and gains of business or profession". There is no partial relief for a small consultancy or trading activity.

Does advance tax apply under both the old and the new regime? Yes. The regime determines how much tax you owe, not whether you must pay it in instalments.

What happens if I miss 15 March 2027 altogether? Anything paid up to 31 March is still treated as advance tax under Section 408(3). After that, the balance becomes self-assessment tax and Section 424 interest begins to run from 1 April 2027.

Glossary#

Advance tax. Income tax paid in instalments during the year in which the income is earned, rather than after it.

Tax year. The 12 months from 1 April to 31 March in which income is earned. The Income-tax Act, 2025 uses this single term in place of the old "previous year" and "assessment year".

TDS and TCS. Tax deducted at source by whoever pays you, and tax collected at source by whoever sells to you. Both count against your advance tax liability.

Current income. Your estimated total income for the tax year now running, which is what advance tax is computed on.

Tax due on returned income. The tax shown in the return you eventually file, after credit for TDS and specified reliefs. The 12% and 36% tolerances are measured against it.

Presumptive taxation. A scheme under Section 58 that deems profit as a fixed percentage of turnover or receipts, removing the need for detailed books, in exchange for a fixed presumption of profit.

Minor head 100. The code on the tax payment challan that identifies a payment as advance tax rather than self-assessment or regular assessment tax.

Self-assessment tax. The balance you pay when filing your return, after advance tax and TDS have been accounted for.

A note on scope#

This piece summarises statutory provisions and published departmental data as they stood on 8 September 2026. It is general information, not tax advice, and it does not account for surcharge, the old regime's deductions, or the many special cases the Act contains. Anyone with a complicated year, whether that means a property sale, foreign income or a business in its first months, should take professional advice before deciding what to pay.

References#

1. Income-tax Act, 2025, Section 403: liability for payment of advance tax and the exemption for resident individuals aged 60 or above
2. Income-tax Act, 2025, Section 404: the ₹10,000 threshold
3. Income-tax Act, 2025, Section 405: computation of advance tax
4. Income-tax Act, 2025, Section 408: instalments and due dates, including the presumptive concession and the 31 March rule
5. Income-tax Act, 2025, Section 425: interest for deferment of advance tax, tolerances and the capital gains proviso
6. Section 424: interest where advance tax falls short of 90% of assessed tax
7. TaxGuru, advance tax under the Income Tax Act, 2025: liability, due dates and interest
8. Income Tax Department, tax payments help page: the ₹10,000 rule and the presumptive single instalment
9. News on AIR, Income Tax Department clarification on advance tax e-campaign emails, 14 March 2026
10. Business Standard, direct tax collections to 17 June 2026, including advance tax of ₹1.78 lakh crore
11. TaxGuru, CBDT figures on the corporate and non-corporate split of advance tax collections
12. TaxGuru, TDS rates and thresholds effective 1 April 2026 under the Income-tax Act, 2025
13. CA Dialogue, Section 393 replacing Section 194J: 10% on professional fees above ₹50,000
14. CA Alok Kumar, presumptive taxation under Sections 58 and 61: turnover limits and deemed profit rates
15. Income Tax Return India, new regime slabs for tax year 2026-27 and the Section 202 rebate
16. ClearTax, advance tax due dates and the e-Pay Tax payment route
17. Business Today, income tax deadlines in September 2026
18. Wikipedia, Income-tax Act, 2025: commencement on 1 April 2026