Introduction
Advance tax is tax paid during the same year in which income is earned. For Tax Year 2026-27, the Income-tax Act, 2025 applies to advance tax payments.
Many taxpayers assume that if their income is below the new-regime rebate threshold, they do not need to pay advance tax. But this is not always correct.
Advance tax may become payable if your total tax liability, after considering TDS/TCS and reliefs, is ₹10,000 or more.
This is especially important for taxpayers having:
- business income;
- professional income;
- freelance income;
- capital gains;
- rental income;
- interest income;
- dividend income;
- income without sufficient TDS.
For advance tax calculation, ITR filing and tax planning support, visit TaxClear.in.
What Is Advance Tax?
Advance tax means paying income tax in instalments during the tax year instead of paying the full tax at the time of ITR filing.
For Tax Year 2026-27, income earned from 1 April 2026 to 31 March 2027 is covered.
If your estimated tax liability for the year is ₹10,000 or more, advance tax may be payable during the year.
Which Act Applies for Tax Year 2026-27?
For advance tax relating to Tax Year 2026-27, payment is governed by the Income-tax Act, 2025.
This is important because the e-filing portal now asks taxpayers to select the applicable Act while making payment.
| Period / Payment | Applicable Act |
|---|---|
| Tax Year 2026-27 advance tax | Income-tax Act, 2025 |
| Payments for earlier years up to AY 2026-27 | Income-tax Act, 1961 |
| Self-assessment tax for AY 2026-27 | Income-tax Act, 1961 |
| Self-assessment tax for TY 2026-27 after year-end | Income-tax Act, 2025 |
The Tax Year concept is used under the Income-tax Act, 2025.
Who Has to Pay Advance Tax?
Advance tax is payable where the tax payable during the year is ₹10,000 or more.
It can apply to:
| Taxpayer Type | Advance Tax Applicability |
|---|---|
| Salaried person | Yes, if TDS is insufficient and tax payable is ₹10,000 or more |
| Freelancer | Yes |
| Business owner | Yes |
| Professional | Yes |
| Investor with capital gains | Yes |
| Person with FD interest | Yes, if TDS is insufficient |
| Person with rental income | Yes |
| Retired person with taxable income | Yes, unless exempt as senior citizen without business income |
| Senior citizen without business/profession income | Generally exempt from advance tax |
Senior Citizen Exemption
A resident senior citizen who does not have income from business or profession is generally not required to pay advance tax.
However, if a senior citizen has business or professional income, advance tax rules may apply.
Advance Tax Threshold
| Particulars | Rule |
|---|---|
| Advance tax payable if tax liability is | ₹10,000 or more |
| Threshold under new Act | Same as old Act |
| Relevant section under Income-tax Act, 2025 | Section 404 |
So, if your final tax payable after TDS/TCS is below ₹10,000, advance tax may not be required.
Advance Tax Due Dates for Tax Year 2026-27
Advance tax is payable in four instalments.
| Due Date | Cumulative Advance Tax Payable |
|---|---|
| On or before 15 June 2026 | At least 15% |
| On or before 15 September 2026 | At least 45% |
| On or before 15 December 2026 | At least 75% |
| On or before 15 March 2027 | 100% |
Any tax paid on or before 31 March is also treated as advance tax paid during that financial year.
Advance Tax for Presumptive Taxpayers
Taxpayers using presumptive taxation under eligible provisions are allowed to pay the entire advance tax in one instalment.
| Taxpayer Type | Advance Tax Requirement |
|---|---|
| Normal taxpayer | Four instalments |
| Eligible presumptive taxpayer | 100% by 15 March |
| Tax paid by 31 March | Treated as advance tax |
This is useful for small businesses and professionals under presumptive taxation.
Why Advance Tax Is Important
If advance tax is not paid on time, interest may apply.
Two important interest provisions under the Income-tax Act, 2025 are:
| New Act Section | Old Act Equivalent | Purpose |
|---|---|---|
| Section 424 | Section 234B | Interest for default in payment of advance tax |
| Section 425 | Section 234C | Interest for deferment of advance tax instalments |
Interest can increase your final tax outflow at the time of ITR filing.
Interest Under Section 424
Section 424 applies when:
- you were liable to pay advance tax but did not pay it; or
- advance tax paid is less than 90% of assessed tax.
Interest is generally calculated at 1% per month or part of a month on the shortfall.
| Situation | Interest Risk |
|---|---|
| No advance tax paid despite liability | Section 424 interest |
| Less than 90% of assessed tax paid by year-end | Section 424 interest |
| Tax payable discovered during ITR filing | Interest may be added |
Interest Under Section 425
Section 425 applies when advance tax instalments are deferred or underpaid.
For normal taxpayers, shortfall interest may apply if payment is below the required instalment percentage.
| Due Date | Required Cumulative Tax | Interest Pattern |
|---|---|---|
| 15 June | 15% | Shortfall interest |
| 15 September | 45% | Shortfall interest |
| 15 December | 75% | Shortfall interest |
| 15 March | 100% | Shortfall interest |
The law provides interest on shortfall, generally at the prescribed rate.
Capital Gains and Advance Tax
Capital gains can create advance tax liability even when salary TDS is already deducted.
Examples:
- sale of shares;
- sale of mutual funds;
- sale of property;
- sale of gold;
- sale of foreign shares;
- crypto/VDA income, where applicable;
- large dividend or interest income.
If capital gains arise during the year, tax should be estimated and paid in the relevant remaining instalments.
Important Point: ₹12 Lakh Rebate Does Not Always Remove Capital Gains Tax
Under the new tax regime, resident individuals may get rebate where total income does not exceed ₹12 lakh, subject to limits.
However, special-rate incomes such as certain capital gains may need careful treatment. For example, rebate is not available against tax payable on long-term capital gains under Section 112A, though rebate may be available against tax on other income as per applicable rules.
Therefore, even if normal income appears covered by rebate, capital gains may still create tax or advance tax liability.
Example: Advance Tax Not Required
| Particulars | Amount |
|---|---|
| Salary income | ₹8,00,000 |
| Interest income | ₹50,000 |
| Capital gains | Nil |
| Estimated final tax after rebate/TDS | ₹6,000 |
| Advance tax required? | No, because tax payable is below ₹10,000 |
Example: Advance Tax Required Due to Capital Gains
| Particulars | Amount |
|---|---|
| Salary income | ₹8,00,000 |
| Business/freelance income | ₹50,000 |
| Interest income | ₹50,000 |
| Short-term capital gains | ₹80,000 |
| Long-term capital gains | ₹1,35,000 |
| Estimated tax payable after TDS | More than ₹10,000 |
| Advance tax required? | Yes |
This is why investors should calculate advance tax after every major capital gain transaction.
Step-by-Step Advance Tax Calculation
Step 1: Estimate Total Income
Include all expected income for the year:
| Income Source | Include? |
|---|---|
| Salary | Yes |
| Business income | Yes |
| Professional income | Yes |
| Freelance income | Yes |
| Rental income | Yes |
| Interest income | Yes |
| Dividend income | Yes |
| Capital gains | Yes |
| Foreign income | Yes, if taxable |
| Other income | Yes |
Step 2: Choose Old or New Tax Regime
Compare tax liability under both regimes.
| Point | Old Regime | New Regime |
|---|---|---|
| Deductions like 80C/80D | Available | Generally not available |
| Standard deduction | Available for salary/pension | Available for salary/pension |
| Rebate | Lower threshold | Higher threshold |
| Best for | Taxpayers with deductions | Taxpayers without many deductions |
Step 3: Calculate Tax on Normal Income
Apply applicable slab rates.
Step 4: Add Tax on Special Income
Special-rate income may include:
- short-term capital gains under special provisions;
- long-term capital gains;
- lottery income;
- VDA/crypto income;
- other special-rate income.
Step 5: Reduce TDS/TCS
Reduce:
- salary TDS;
- bank TDS;
- dividend TDS;
- rent TDS;
- professional receipts TDS;
- TCS;
- foreign tax credit, where applicable.
Step 6: Check ₹10,000 Threshold
If net tax payable is ₹10,000 or more, advance tax is payable.
Step 7: Pay Instalment Before Due Date
Pay the correct instalment before 15 June, 15 September, 15 December and 15 March.
Advance Tax Instalment Example
Suppose your estimated total advance tax liability is ₹1,00,000.
| Due Date | Cumulative Tax Required | Amount to Pay by That Date |
|---|---|---|
| 15 June | ₹15,000 | ₹15,000 |
| 15 September | ₹45,000 | Additional ₹30,000 |
| 15 December | ₹75,000 | Additional ₹30,000 |
| 15 March | ₹1,00,000 | Additional ₹25,000 |
This is cumulative, not separate 15%, 45%, 75% and 100% every time.
How to Pay Advance Tax Online for Tax Year 2026-27
Step 1: Login to Income Tax Portal
Go to the Income Tax e-filing portal and login.
Step 2: Go to e-File > e-Pay Tax
Open the e-Pay Tax section.
Step 3: Select Income-tax Act, 2025
For Tax Year 2026-27 advance tax, select Income-tax Act, 2025.
Step 4: Select New Payment
Choose a new tax payment.
Step 5: Select Income Tax Tile
For individuals/non-companies, choose Income Tax. Companies should select the relevant corporation tax option.
Step 6: Select Tax Year and Minor Head
Choose:
| Field | Selection |
|---|---|
| Tax Year | 2026-27 |
| Minor Head | 100 – Advance Tax |
| Act | Income-tax Act, 2025 |
Step 7: Enter Tax Amount
Enter the amount you want to pay under tax.
Step 8: Choose Payment Mode
Payment modes may include:
- net banking;
- debit card;
- UPI;
- payment gateway;
- RTGS/NEFT;
- pay at bank counter, where available.
Step 9: Complete Payment
After payment, download the challan receipt.
Step 10: Save Challan Details
Keep:
- BSR code;
- challan serial number;
- date of payment;
- amount;
- CIN/challan details;
- PDF receipt.
These details are useful during ITR filing.
How to Check Advance Tax Payment History
After payment, check payment history on the portal.
You can verify:
- whether payment was successful;
- challan details;
- tax year;
- minor head;
- amount;
- payment date;
- challan receipt.
Also cross-check later in AIS/Form 168 and tax payment schedules while filing ITR.
Common Mistakes While Paying Advance Tax
| Mistake | Risk |
|---|---|
| Selecting wrong Act | Challan mismatch |
| Selecting Income-tax Act, 1961 for TY 2026-27 | Wrong payment mapping risk |
| Selecting wrong Tax Year | Credit mismatch |
| Selecting wrong minor head | Advance tax not reflected correctly |
| Paying self-assessment tax instead of advance tax | Wrong classification |
| Not saving challan | Difficulty during ITR filing |
| Ignoring capital gains | Interest under Sections 424/425 |
| Assuming salary TDS covers everything | Shortfall may remain |
| Not checking AIS/Form 168 | Credit mismatch |
| Waiting until ITR filing | Interest burden |
Difference Between Advance Tax and Self-Assessment Tax
| Point | Advance Tax | Self-Assessment Tax |
|---|---|---|
| Paid when | During the tax year | |
| Purpose | Pay tax in advance on current income | |
| Minor head | 100 | |
| For TY 2026-27 | Paid under Income-tax Act, 2025 | |
| Self-assessment tax | Paid after year-end before filing return | |
| Minor head for self-assessment tax | 300 |
Advance tax prevents interest. Self-assessment tax is usually paid later when final tax remains unpaid.
How to Avoid Interest
To avoid interest:
- Estimate income early.
- Include capital gains and interest income.
- Recalculate after every major transaction.
- Pay instalments on time.
- Check TDS actually deducted.
- Pay extra advance tax if income increases.
- Do not wait until ITR filing.
- Keep challan records.
Advance Tax and Salaried Taxpayers
Salaried taxpayers often assume they do not need advance tax because the employer deducts TDS.
That is true only if TDS covers the full tax liability.
Advance tax may still be required where the salaried taxpayer has:
- capital gains;
- FD interest;
- rental income;
- freelance income;
- foreign income;
- dividend income;
- crypto/VDA income;
- business income;
- low TDS from employer.
Advance Tax and Freelancers
Freelancers often receive payments after TDS under Section 194J/194C type provisions. But TDS may be lower than final tax liability.
Therefore, freelancers should calculate advance tax quarterly.
For freelance income tax planning, visit TaxClear.in.
Advance Tax and Business Owners
Business owners should prepare quarterly income estimates.
Check:
- turnover;
- profit margin;
- GST data;
- expenses;
- TDS/TCS;
- previous year profit;
- seasonal income;
- capital gains;
- depreciation;
- presumptive taxation eligibility.
Advance Tax and Investors
Investors should calculate tax after:
- selling shares;
- selling mutual funds;
- receiving large dividends;
- selling property;
- selling gold;
- earning foreign dividends;
- selling foreign stocks.
Capital gains often create surprise tax liability because TDS may not be deducted.
Documents Needed for Advance Tax Calculation
| Document | Purpose |
|---|---|
| Salary slip | Salary estimate |
| Form 16/Form 130 projection | TDS estimate |
| Broker capital gains report | Share/mutual fund gain |
| Bank interest certificate | Interest income |
| Rent agreement | Rental income |
| Business P&L estimate | Business income |
| Freelance invoices | Professional income |
| AIS/Form 168 | Income/tax cross-check |
| TDS certificates | Tax credit |
| Previous ITR | Comparison and planning |
TaxClear View
Advance tax should not be treated as an optional payment. If your final tax liability after TDS/TCS is ₹10,000 or more, advance tax must be planned during the year.
The biggest mistake taxpayers make is waiting until ITR filing. By that time, interest under Sections 424 and 425 may already be unavoidable.
For Tax Year 2026-27, taxpayers should also be careful while using the e-pay tax portal because payments for this tax year fall under the Income-tax Act, 2025.
Key Takeaways
- Advance tax applies if net tax payable is ₹10,000 or more.
- For Tax Year 2026-27, select Income-tax Act, 2025 while paying advance tax.
- Due dates are 15 June, 15 September, 15 December and 15 March.
- Required cumulative payments are 15%, 45%, 75% and 100%.
- Presumptive taxpayers may pay 100% by 15 March.
- Capital gains can trigger advance tax liability.
- ₹12 lakh rebate does not always eliminate tax on special-rate income.
- Interest under Sections 424 and 425 may apply for default or deferment.
- Minor Head 100 should be selected for advance tax.
- Save challan details for ITR filing.
Conclusion
Advance tax for Tax Year 2026-27 must be handled carefully because the new Income-tax Act, 2025 applies. If your tax payable after TDS/TCS is ₹10,000 or more, you should estimate income and pay advance tax on time.
Do not assume that salary TDS or the ₹12 lakh new-regime rebate will automatically protect you. Capital gains, interest, rent, dividend and business income can still create advance tax liability.
Calculate early, pay the correct instalment, select the correct Act and minor head, and save your challan.
For advance tax calculation, ITR filing, tax planning and capital gains tax support, visit TaxClear.in.
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