Advance Tax for AY 2026-27: The Rs 10,000 Threshold, Four Instalment Dates, and Interest Under 234B/234C

Most salaried taxpayers assume income tax is somebody else's problem until 31 July, the usual ITR due date. But the Income Tax Act 1961 expects you to pay tax as you earn, in four instalments across the financial year, the moment your estimated annual liability touches Rs 10,000. Miss those dates and Sections 234B and 234C quietly add 1% a month in interest, which the Centralised Processing Centre computes automatically when it processes your return. For Assessment Year 2026-27 (the year that taxes income earned between 1 April 2025 and 31 March 2026), the first advance tax instalment fell due on 15 June 2025 and the final one on 15 March 2026.

This guide breaks down the Rs 10,000 threshold under Section 208, the four statutory due dates under Section 211, who is exempt, and exactly how the interest under Sections 234B and 234C is computed with a worked example you can replicate in the income tax calculator.

What the Section Says

The advance tax machinery sits in Chapter XVII-C of the Income Tax Act 1961, principally Sections 207 to 211. Section 208 sets the trigger: advance tax is payable in every case where the tax liability for the financial year, after reducing TDS and TCS already deducted, is Rs 10,000 or more. Below that figure you owe nothing in advance and simply pay self-assessment tax before filing.

Section 211 then fixes the four instalment dates and the cumulative percentage of total liability that must be cleared by each. For all taxpayers other than those under the presumptive scheme, the schedule for AY 2026-27 ran as follows.

Section 207 carves out an important exemption. A resident senior citizen aged 60 or above who has no income chargeable under the head "Profits and gains of business or profession" is not liable to pay advance tax at all; such a person can settle the entire dues as self-assessment tax before filing. A 67-year-old pensioner with only pension and interest income, for instance, never has to track the 15 June or 15 September dates.

Taxpayers who opt for the presumptive schemes under Section 44AD or 44ADA get a concession on timing. Under the proviso to Section 211(1), they are required to pay their entire advance tax in a single instalment on or before 15 March. A freelance designer declaring income at 50% of gross receipts under Section 44ADA, therefore, has no June, September or December obligation, only the 15 March 2026 deadline.

Two interest provisions enforce the schedule. Section 234B charges simple interest at 1% per month where the advance tax actually paid during the year is less than 90% of the assessed tax, running from 1 April of the assessment year until the date the shortfall is paid. Section 234C charges 1% per month for deferment of individual instalments, with a built-in safe harbour: no interest applies for the first instalment if you have paid at least 12% by 15 June, and for the second if you have paid at least 36% by 15 September, even though the headline thresholds are 15% and 45%.

Worked Example

Consider Rohan, a salaried product manager in Bengaluru, whose total tax liability for FY 2025-26 (AY 2026-27) works out to Rs 1,00,000 after his employer's TDS, owing to Rs 6,00,000 of short-term capital gains he booked on equity in October 2025 that no employer deducted tax on. Because his self-funded liability exceeds Rs 10,000, Section 208 makes him an advance tax payer. You can reproduce the slab maths in the old vs new regime calculator.

His statutory instalment schedule, assuming the Rs 1,00,000 was foreseeable, looks like this.

Now suppose Rohan ignored the first two dates entirely, paid nothing until 15 December 2025 when he deposited Rs 75,000, and cleared the balance Rs 25,000 on 15 March 2026. Section 234C bites on the two deferred instalments. For 15 June, he paid 0% against a 12% safe harbour, so interest runs at 1% for three months on the 15% shortfall: 1% x 3 x Rs 15,000 = Rs 450. For 15 September, he paid 0% against a 36% safe harbour, so interest runs at 1% for three months on the 45% shortfall: 1% x 3 x Rs 45,000 = Rs 1,350. Because the 15 December and 15 March instalments were paid in full, no further 234C arises, giving a total 234C interest of Rs 1,800.

Section 234B is tested separately. Rohan paid Rs 1,00,000 during the year, which is 100% of his assessed tax, comfortably above the 90% floor, so no 234B interest applies in this version of events. Had he instead paid only Rs 75,000 (75%) by 31 March 2026 and the remaining Rs 25,000 as self-assessment tax on 20 July 2026, the 90% test would fail, and 234B would charge 1% per month on the Rs 25,000 shortfall for the four months from April to July 2026, adding roughly Rs 1,000 on top of the 234C amount. The lesson is arithmetic, not opinion: paying the December instalment on time saved Rohan nothing on 234C for September, because 234C looks at each instalment date in isolation.

Common Mistakes

The first and costliest error is treating advance tax as relevant only to the self-employed. Salaried employees with sizeable capital gains, dividend income above the TDS net, interest from fixed deposits, or rental income routinely cross the Rs 10,000 line under Section 208 even after employer TDS, and the CPC computes 234B/234C on the gap without any human prompting. Use the capital gains calculator to estimate the tax on a share or property sale before the next instalment date rather than after.

A second mistake is misreading the safe harbour. Many taxpayers believe paying exactly 15% by 15 June and 45% by 15 September is the minimum, but Section 234C actually tolerates a small shortfall: 12% by 15 June and 36% by 15 September attract no interest. The flip side is that paying 14% when you intended 15% still triggers interest on the full 15% shortfall, not the 1% gap, because the relief is binary once you fall below 12%.

The third pitfall concerns capital gains and dividend income that could not have been foreseen. The proviso to Section 234C(1) provides that where the shortfall arises because of capital gains, winnings, dividend income, or first-time business income that accrued after a particular instalment date, no 234C interest is charged on that instalment provided the tax is paid in the remaining instalments or by 31 March. So a share sale in October 2025 escapes 234C for the June and September instalments, but only if the resulting tax is bundled into the December and March payments. Taxpayers who forget to top up the very next instalment lose this relief entirely.

A fourth error is forgetting the senior-citizen exemption cuts both ways. A 62-year-old who has retired from salary but earns Rs 4,00,000 a year from a consultancy practice does have business or professional income, so the Section 207 exemption does not apply and all four instalment dates bind. Check whether any portion of your income is "business or profession" before assuming you are exempt; pension and interest alone qualify, professional fees do not.

Finally, presumptive taxpayers often pay across four instalments out of habit and then find the timing irrelevant, or worse, miss the single 15 March deadline believing they have until July. Under the Section 211(1) proviso the entire liability is due by 15 March 2026, and a 44ADA professional who pays on 10 April 2026 faces 234B interest for at least one month on the whole assessed tax. Run your numbers through the TDS calculator to net off any tax already deducted by clients under Section 194J before computing the 15 March instalment.

FAQ

What is the Rs 10,000 threshold for advance tax?

Under Section 208 of the Income Tax Act 1961, advance tax is payable only if your estimated tax liability for the financial year, after reducing TDS and TCS, is Rs 10,000 or more. If your net liability after deductions is, say, Rs 8,500, you owe no advance tax and simply pay it as self-assessment tax before filing your return.

What are the advance tax due dates for AY 2026-27?

The four instalments under Section 211 fell on 15 June 2025 (15%), 15 September 2025 (45% cumulative), 15 December 2025 (75% cumulative) and 15 March 2026 (100%). Presumptive taxpayers under Sections 44AD and 44ADA pay 100% in a single instalment by 15 March 2026.

How is interest under Section 234C calculated?

Section 234C charges simple interest at 1% per month for deferring an instalment. For the first three instalments the interest runs for three months each on the shortfall, and for the final 15 March instalment it runs for one month. A safe harbour means no interest applies if you have paid at least 12% by 15 June and 36% by 15 September.

What is the difference between Section 234B and 234C?

Section 234C penalises the deferment of individual instalments within the year, computed date by date. Section 234B penalises an overall shortfall: if the total advance tax paid during the year is less than 90% of your assessed tax, 1% per month runs from 1 April of the assessment year until you clear the gap. You can attract both in the same year.

Are senior citizens exempt from advance tax?

Yes, under Section 207 a resident individual aged 60 or above who has no income under the head "profits and gains of business or profession" is not liable to pay advance tax. Such a senior citizen can pay the entire amount as self-assessment tax before filing. A senior with consultancy or business income, however, must pay all four instalments.

Do I pay advance tax on capital gains I could not predict?

The proviso to Section 234C(1) waives interest on capital gains, dividend, lottery, or first-time business income that arose after an instalment date, provided you pay the tax in the remaining instalments or by 31 March. So tax on a share sale in October 2025 must be included in the December 2025 and March 2026 instalments to avoid 234C.

How do I actually pay advance tax?

Advance tax is deposited online through the e-Pay Tax facility on the income tax e-filing portal at incometax.gov.in, selecting "Advance Tax (100)" as the type of payment for the relevant assessment year. The challan (Challan 280 / ITNS 280) generates a CIN you should retain, and the payment auto-populates in your Annual Information Statement and Form 26AS.