New Delhi, June 13: The deadline for submitting the first installment of advance tax for the financial year 2026-27 is June 15. Taxpayers whose total tax liability exceeds a specified limit over the year must pay a portion of their estimated tax liability by this date. The advance tax system operates on the principle of “pay as you earn,” allowing taxpayers to pay their taxes in installments throughout the year.
According to income tax regulations, if an individual’s total estimated tax liability, after adjusting for TDS and TCS, exceeds ₹10,000 during the financial year, they are required to pay advance tax.
This requirement applies to salaried employees, freelancers, consultants, business owners, and other taxpayers. However, not all taxpayers are subject to this rule, as some categories are exempt.
Senior citizens aged 60 or above are exempt from advance tax, provided they do not have any business or professional income. If a senior citizen earns income from a business or profession, they must pay advance tax like other taxpayers.
Salaried employees whose income from capital gains exceeds the tax threshold must also pay advance tax. Additionally, freelancers, consultants, landlords earning rental income, investors earning interest from fixed deposits, and senior citizens with business income fall under this category.
If an individual’s income is subject to TDS but additional income such as rent, interest, or capital gains raises their total tax liability above ₹10,000, they must also pay advance tax.
Taxpayers can submit advance tax online through the income tax department’s e-filing portal. They need to log in to the portal, navigate to the ‘e-file’ section, and select the ‘e-pay tax’ option. Then, they should click on ‘new payment’ and choose the relevant income tax category.
Next, they must select ‘advance tax’ (code 100) for the financial year 2026-27 and fill in the necessary tax details before choosing a payment method to complete the transaction.
Taxpayers under the presumptive taxation scheme, such as small business owners or certain professionals, must pay 100% of their advance tax in one lump sum by March 15, 2027. They can also settle their total tax by March 31, 2027.
If a taxpayer fails to submit advance tax by the deadline, they may incur interest charges. If at least 90% of the total tax liability is not paid by March 31, interest at a rate of 1% per month on the outstanding amount will apply under Section 424 (formerly Section 234B) of the Income Tax Act.
Moreover, if advance tax is not paid according to the specified quarterly deadlines, interest will also be charged at 1% per month under Section 425 (formerly Section 234C).
For the financial year 2026-27, advance tax must be paid in four installments. The first installment of 15% is due by June 15, 2026, the second installment of 45% by September 15, 2026, the third installment of 75% by December 15, 2026, and the final installment of 100% by March 15, 2027.
Tax experts advise taxpayers to estimate their potential income for the entire financial year and pay advance tax regularly. This not only ensures compliance with income tax regulations but also helps avoid additional interest and penalties. Timely payment of advance tax is considered crucial for maintaining financial discipline.
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