What is due next: second advance-tax instalment on September 15, who must pay and how the slabs work

The June leg of the advance-tax cycle closed on 15 June 2026, and the next hard date on the FY 2026-27 (assessment year 2027-28) calendar is 15 September 2026, when the second instalment falls due. Under Section 208 of the Income-tax Act 1961, anyone whose estimated tax liability for the year works out to Rs 10,000 or more after credit for TDS and TCS must pay tax in advance rather than waiting for the year-end return. Miss the date and the cost is not a flat penalty but running interest at 1 percent per month, so the September instalment is the single deadline worth pencilling in now (source: incometax.gov.in).

This watchlist sets out exactly who is covered, the 15/45/75/100 percent schedule fixed by Section 211, and how the interest provisions in Sections 234B and 234C bite if you under-pay. It matters even in a calm rate environment: the RBI repo rate has stood at 5.25 percent since the Monetary Policy Committee held it on 8 April 2026, but the 234C interest clock runs at 12 percent annualised regardless of where the policy rate sits. You can stress-test your own number on the Oquilia advance-tax calculator before you transfer a rupee.

Statutory Deadlines

The headline deadline is 15 September 2026, by which a non-presumptive taxpayer must have paid a cumulative 45 percent of the year's estimated tax. This is the second of four instalments laid down in Section 211 of the Income-tax Act 1961. The full statutory schedule for FY 2026-27 runs as follows.

Two categories of taxpayer sit outside this grid. First, a resident senior citizen aged 60 or above who has no income chargeable under the head "Profits and gains of business or profession" is exempt from advance tax altogether under Section 207(2), and settles the whole liability as self-assessment tax before filing. Second, taxpayers who declare income on a presumptive basis under Section 44AD or Section 44ADA pay the entire 100 percent in a single shot by 15 March 2027 rather than across four dates; you can model that route on the presumptive-tax calculator.

On the mechanics: advance tax for FY 2026-27 is paid through the e-Pay Tax facility on the income-tax portal using Challan number 280, with the major head "0021" for individuals. One practical note from the official tax calendar matters for last-minute payers - a challan generated on or after 16 March for advance tax is valid only till 31 March of that financial year, so a March instalment cannot be parked and used in the next year. Taxpayers relying on the route of submitting Form 15G or Form 15H to suppress TDS on interest should remember those declarations are filed at the start of the financial year, in April 2026 for FY 2026-27, and do not remove the separate obligation to pay advance tax where total liability crosses Rs 10,000. Definitions of each term sit in the advance-tax glossary entry.

Market Events

There is no central-bank or regulatory meeting on the immediate calendar that changes the advance-tax arithmetic, and this watchlist will not invent one. The relevant standing fact is the policy backdrop: the RBI repo rate is 5.25 percent, held unchanged at the MPC meeting of 8 April 2026, with the Standing Deposit Facility at 5.00 percent and the Marginal Standing Facility at 5.50 percent. That cycle of 125 basis points of cuts through 2025 lowered borrowing costs, but it has no bearing on the cost of deferring advance tax, which is fixed by statute.

That distinction is the market event worth internalising. When you delay an instalment, you are effectively borrowing from the exchequer at 1 percent per month, or roughly 12 percent a year - more than double the 5.25 percent repo rate and well above what a liquid debt fund or savings account returns after tax. For an investor weighing whether to keep cash deployed in markets a few weeks longer rather than meeting the 15 September instalment, the implied 12 percent statutory drag is the number that should anchor the decision. If you would otherwise redeem equity to fund the payment, factor in the long-term capital gains rate of 12.5 percent above the Rs 1,25,000 annual exemption, and the short-term rate of 20 percent, both set by Budget 2024.

Earnings

No corporate results are confirmed on the official exchange calendar for the day this watchlist covers, so none are listed here - the editorial rule is to report only scheduled filings, never a speculative earnings line. The link between results season and the September instalment is nonetheless direct for two groups of taxpayers.

Salaried investors whose employer already deducts TDS on salary still owe advance tax on other income - dividends, interest, capital gains booked during April to August 2026, and rental receipts - if the residual liability after TDS crosses Rs 10,000. A bumper dividend or a profitable quarter realised in your own portfolio before 15 September must therefore be folded into the second instalment, not deferred to March. Taxpayers running a business or profession face the harder task of annualising income that is only partly known by mid-September; the law accepts a reasonable estimate, and the safe harbour is to pay at least 36 percent of the final figure by the second instalment to stay clear of Section 234C interest, as explained below. Run the combined salary-plus-other-income number through the income-tax calculator to size the instalment.

How to pay and avoid Section 234C interest

Section 234C charges interest at 1 percent per month for short payment of any instalment, and Section 234B adds a further 1 percent per month where total advance tax paid for the year falls below 90 percent of the assessed tax. The two are separate and can stack. The worked example below assumes a net tax liability of Rs 2,00,000 for FY 2026-27 after TDS.

The thresholds in the final column reflect the statutory tolerance built into Section 234C. For the first and second instalments the law charges no interest provided you have paid at least 12 percent by 15 June and at least 36 percent by 15 September, which is why those two dates carry a small cushion that the December and March dates do not. If our example taxpayer pays only Rs 60,000 by 15 September instead of the required Rs 90,000, the shortfall of Rs 30,000 attracts 234C interest of 1 percent for three months, or Rs 900, because they also fell below the 36 percent floor of Rs 72,000.

When you compute the liability, remember the add-ons that change the base figure: a health and education cess of 4 percent applies on tax plus surcharge, the surcharge in the new regime is capped at 25 percent even for incomes above Rs 5 crore, and the standard deduction is Rs 75,000 in the new regime for salaried taxpayers. For FY 2025-26 returns the Section 87A rebate in the new regime is Rs 60,000, fully extinguishing tax for incomes up to Rs 12 lakh, which means many such taxpayers have no advance-tax obligation at all. The statutory text for every provision cited here is on indiacode.nic.in, and the payment portal is incometax.gov.in. The reference rate context is published at rbi.org.in.

FAQ

Who has to pay the second advance-tax instalment by 15 September 2026?

Any taxpayer - salaried, self-employed, or a business - whose estimated tax liability for FY 2026-27 is Rs 10,000 or more after TDS and TCS must pay a cumulative 45 percent by 15 September 2026 under Sections 208 and 211. Resident senior citizens aged 60 or above with no business or professional income are exempt.

What happens if I miss the 15 September instalment?

You pay interest at 1 percent per month on the shortfall under Section 234C, charged for three months for the September instalment. If your total advance tax for the year ends up below 90 percent of the final assessed tax, Section 234B adds a further 1 percent per month from 1 April 2027 until you pay.

Do salaried employees need to pay advance tax at all?

If your only income is salary and your employer deducts the correct TDS, usually not. But advance tax becomes due on additional income - dividends, interest, rent, or capital gains booked during the year - once the residual liability after TDS exceeds Rs 10,000.

How is advance tax different from self-assessment tax?

Advance tax is paid in four instalments during the financial year on 15 June, 15 September, 15 December and 15 March. Self-assessment tax is any balance paid after the year ends, when you file the return, and carries 234B interest if advance tax fell short of 90 percent.

How do taxpayers under presumptive taxation pay?

Those declaring income under Section 44AD or 44ADA pay 100 percent of their advance tax in one instalment by 15 March 2027, not across four dates. Falling short of that single deadline triggers Section 234C interest at 1 percent per month.

Which challan and code do I use to pay the September instalment?

Use Challan number 280 through the e-Pay Tax facility on incometax.gov.in, select major head 0021 for individuals and the minor head for advance tax (code 100), and the credit reflects in your Form 26AS within a few days.

Does the RBI repo rate affect advance-tax interest?

No. The repo rate of 5.25 percent governs bank lending and deposit rates, but Sections 234B and 234C fix the interest on under-paid advance tax at 1 percent per month, roughly 12 percent a year, irrespective of monetary policy.