Advance tax is a pay-as-you-earn mechanism for income tax. For Tax Year 2026-27, the Income Tax Department confirms that the Income Tax Act, 2025 applies and that the basic threshold remains ₹10,000: if the advance tax payable for the year is ₹10,000 or more, advance tax becomes payable.
The Department's official Tax Payments FAQ also confirms that the new Act makes no policy change to advance-tax payment rules.
Who needs to pay advance tax?
The starting point is estimated tax payable for the year after taking into account taxes expected to be deducted or collected at source and other relevant credits. If the resulting advance-tax liability is ₹10,000 or more, the advance-tax provisions apply.
This can affect salaried taxpayers too. Employer TDS may cover salary tax, but interest, rent, capital gains or other income can create an additional liability.
Normal advance-tax instalments
For taxpayers following the normal instalment schedule, the cumulative advance tax payable is at least 15% by 15 June, 45% by 15 September, 75% by 15 December and 100% by 15 March. Each percentage is cumulative.
Presumptive taxation has a different timing rule
The Department confirms that assessees using the relevant presumptive taxation scheme under section 58 of the Income Tax Act, 2025 discharge the entire advance-tax liability in one instalment on or before 15 March.
Resident senior citizens: check the exception carefully
The long-standing advance-tax relief for a resident senior citizen without income from business or profession is an important exception. Residential status, age and nature of income should be checked before assuming advance tax is payable.
Worked example: professional on the normal schedule
Assume a professional estimates total advance tax at ₹4,00,000 and is not using the qualifying presumptive scheme. The cumulative targets are ₹60,000 by 15 June, ₹1,80,000 by 15 September, ₹3,00,000 by 15 December and ₹4,00,000 by 15 March. If ₹60,000 was paid in June, the September payment needed to reach 45% is ₹1,20,000.
The calculation should be refreshed before every instalment. If income rises or falls, remaining payments should be recomputed.
What happens if advance tax is short-paid?
The Department confirms that the interest regime remains substantively unchanged under the 2025 Act. Interest corresponding to old section 234B applies where advance tax is not paid as required or is less than 90% of assessed tax, while the provision corresponding to old section 234C deals with deferment of instalments. The official FAQ identifies these as sections 424 and 425 under the Income Tax Act, 2025.
How to build an advance-tax estimate
- Estimate full-year income: include salary, business or professional income, interest, rent, capital gains and other expected taxable items.
- Apply the correct tax regime and rates: use the law applicable to the relevant tax year.
- Reduce eligible tax credits: factor in expected TDS, TCS and other credits.
- Check the ₹10,000 threshold: identify the applicable schedule if the threshold is reached.
- Compare cumulative targets with tax already paid: pay the amount required to reach the applicable cumulative percentage.
- Re-estimate before each instalment: update for actual profits, interest, capital gains and changed credits.
How can advance tax be paid online?
The Income Tax Department's Make Payment Online FAQ lists authorised-bank net banking and debit cards, payment gateways and UPI among available online modes. It also notes that a generated challan generally has a 15-day payment window; for advance tax, payment must also be made by 31 March where that date arrives earlier.
After payment, retain the challan and reconcile it with the taxpayer's payment history.
Common mistakes to avoid
- Checking only salary TDS and ignoring interest, rent, capital gains or business income.
- Treating 15%, 45%, 75% and 100% as separate percentages instead of cumulative targets.
- Using the normal quarterly schedule for a taxpayer covered by the qualifying presumptive single-instalment rule.
- Failing to revise the estimate when income changes materially.
- Waiting until ITR preparation to reconcile advance-tax challans and tax credits.
Practical takeaway
Advance tax is best managed as a rolling tax forecast. For Tax Year 2026-27, first check whether estimated advance tax is at least ₹10,000, then identify the correct normal or presumptive payment schedule. Recompute before each instalment, reconcile tax credits and retain verified challan evidence.
