Due by 15 September
45%
of the year's tax after TDS
Interest rate
1% a month
part-months count in full
Threshold
₹10,000
tax due after TDS
Next date
15 December
75% cumulative
Tax year 2026-27 (1 April 2026 to 31 March 2027), rules checked against the Income Tax Department in September 2026.
Know your salary tax first
Work out the tax on your salary under the new or old regime, then add your other income to see the advance tax gap.
How advance tax interest works under 234B and 234C
Advance tax is tax you pay during the year on income that TDS doesn't cover. If the tax still due after TDS is ₹10,000 or more, you owe it in four cumulative instalments:
| Due date | Paid by then | No section 425 interest if you paid at least | Interest period if short |
|---|---|---|---|
| 15 June 2026 | 15% | 12% | 3 months |
| 15 September 2026 | 45% | 36% | 3 months |
| 15 December 2026 | 75% | 75% | 3 months |
| 15 March 2027 | 100% | 100% | 1 month |
Two interest charges then apply:
- Section 425 (formerly 234C), for paying late. 1% a month on the shortfall against each cumulative percentage, for the period shown. It applies even if you pay everything by 31 March (Income Tax Department).
- Section 424 (formerly 234B), for paying too little. If advance tax and TDS together cover less than 90% of your final tax, 1% a month on the unpaid amount from 1 April 2027 until you pay it (Income Tax Department).
Both are simple interest, and any part of a month counts as a full month. Paying on 16 September instead of 15 September costs you the same as paying on 14 October.
Advance tax interest calculator example: pay now or wait?
Say you are a Bengaluru engineer whose salary TDS is right, but you also earn freelance and rental income. That leaves ₹1,20,000 of tax for 2026-27 that TDS doesn't cover, and you paid nothing in June or September. Interest follows the statutory formula:
| Interest | Pay the gap before 15 December | Pay everything when filing in July 2027 |
|---|---|---|
| June shortfall (15% × 3 months) | ₹540 | ₹540 |
| September shortfall (45% × 3 months) | ₹1,620 | ₹1,620 |
| December shortfall (75% × 3 months) | Nil | ₹2,700 |
| March shortfall (100% × 1 month) | Nil | ₹1,200 |
| Section 424, April to July (4 months) | Nil | ₹4,800 |
| Total interest | ₹2,160 | ₹10,860 |
Catching up costs ₹2,160. Waiting costs ₹10,860, about 5 times as much. If you file after the due date, section 423 (formerly 234A) adds late-filing interest on top.
What to do this week
| Your situation | Best move |
|---|---|
| Salaried with side income (rent, interest, freelance) | Declare the other income to your employer and ask for higher TDS for the rest of the year, or pay advance tax online now. TDS counts toward the whole year. |
| You sold shares or mutual funds at a gain | Pay tax on the gain in the next instalment. Earlier instalments aren't charged for income that hadn't arisen yet. |
| Freelancer on presumptive income | Nothing is late. Pay the full amount by 15 March 2027. |
| You exercised or sold ESOPs | Check whether your employer deducted TDS at the right regime rate on the perquisite. A sale gain is capital gains and needs its own advance tax. |
| Resident, 60 or over, no business income | No advance tax. Pay any balance as self-assessment tax before filing. |
How to pay advance tax online
- Log in to the income tax e-filing portal and open e-Pay Tax (official guide).
- Choose the tax year 2026-27, Income Tax, and payment type Advance Tax (code 100).
- Pay by net banking, UPI, debit card or at an authorised bank, and save the challan receipt.
- Check it appears in your Form 26AS or AIS within a few days, then claim it in your return.
Advance tax interest questions
I missed the 15 September advance tax instalment. What should I do now?
Pay the shortfall as soon as you can, and at the latest by 15 December with that instalment. The September interest is already fixed at 1% a month for three months on the shortfall, so paying in October doesn't reduce it. What paying now does is stop the December, March and year-end interest from stacking on top. In our ₹1,20,000 example, catching up before December costs ₹2,160 in interest; waiting until you file costs ₹10,860.
Are sections 234B and 234C still the right sections for 2026-27?
Not by number. The Income-tax Act, 2025 applies from 1 April 2026, and for tax year 2026-27 the same interest sits in section 424 (formerly 234B) and section 425 (formerly 234C). The 1% monthly rate, the instalment dates and the 90% rule carry over. For 2025-26 and earlier years, 234B and 234C of the 1961 Act still apply.
Do salaried employees have to pay advance tax?
Only if tax still due after TDS is ₹10,000 or more for the year. For most people with only a salary, TDS covers it. You usually cross the line through interest, rent, capital gains, freelance work or ESOP sales that your employer doesn't tax.
Can my employer's TDS cover the gap instead?
Often, yes. You can declare other income to your employer and ask for higher TDS from your remaining salary. TDS counts toward the whole year's liability, whenever it is deducted, so it shrinks the amount advance tax interest is worked out on. Ask payroll early: they can only spread it across the months left.
Why does my advance tax interest look wrong?
Three things catch people out. Interest is 1% for each month or part of a month, so paying one day late costs a full month. The shortfall is rounded down to the nearest ₹100 before interest is worked out. And interest under section 425 is charged on the cumulative percentage due by each date (15%, 45%, 75%, 100%), not just on that quarter's slice.
What if the extra income came from a one-off capital gain?
You aren't penalised for instalments that fell due before the gain happened. For capital gains and dividends, interest for earlier instalments doesn't apply as long as you pay tax on that income in the remaining instalments, or by 31 March if it arises after 15 March. Pay in the next instalment after the sale.
I'm a freelancer on the presumptive scheme. Did I miss anything?
No. If you are taxed on presumptive income (formerly sections 44AD and 44ADA), you can pay your full advance tax in one instalment by 15 March 2027. The June, September and December dates don't apply to you.
Do senior citizens need to pay advance tax?
Resident individuals aged 60 or more with no business or professional income are exempt. They settle any balance as self-assessment tax before filing, without advance tax interest.
Methodology and limits
Rules come from the Income Tax Department's pages on section 424, section 425 and interest payable by taxpayers, checked in September 2026. The example applies the statutory formula to an illustrative liability: it is not calculated from any real return.
It assumes nothing was paid by 15 September, the full gap is paid before 15 December in the first column, and self-assessment tax is paid in July 2027 in the second. Your actual interest depends on exact payment dates and your final assessed tax. This is general information, not tax advice.