The first advance tax instalment for Tax Year 2026-27 under the Income-tax Act, 2025
fell due on 15 June 2026. Under Section 404 of the new Act, taxpayers whose
estimated tax liability for the Tax Year — after reducing TDS, TCS and eligible reliefs —
is ₹10,000 or more must pay 15% of that estimated liability by this date. This article
explains who must pay, how to compute the liability correctly, and how to deposit
advance tax under the new challan and portal workflow.

Income Tax Act, 2025

Advance Tax — Tax Year 2026-27

⚠ 1st instalment of 15% was due 15 June 2026 — check the 2nd instalment (45%) due 15 September 2026

What is Advance Tax?

Advance tax is income tax paid in instalments during the Tax Year, rather than as a lump sum after the year ends. Under the Income-tax Act, 2025 — which applies from Tax Year 2026-27 onward and has discontinued the separate “Assessment Year” concept — every assessee must pay advance tax if the estimated net tax liability for the Tax Year, after deducting TDS/TCS and reliefs, is ₹10,000 or more (Sections 403 and 404). Payment is made on four prescribed due dates before the Tax Year closes.

Who Must Pay Advance Tax?

• Salaried individuals: If TDS deducted by the employer fully covers the tax liability, no separate advance tax is needed. Where there is additional income (interest, rental income, capital gains, freelance income), advance tax is required on the excess liability.
• Self-employed individuals and professionals: Full advance tax obligation applies.
• Business owners (companies, firms, LLPs): Full advance tax obligation applies, regardless of age.
• Resident senior citizens (60 and above) with no business or professional income: Exempt from advance tax. They may pay self-assessment tax at the time of filing.
• Presumptive taxation taxpayers (Section 58 of the Income-tax Act, 2025 — equivalent to the erstwhile Sections 44AD/44ADA of the 1961 Act): The entire advance tax liability is payable in one instalment by 15 March, instead of the quarterly schedule.

Advance Tax Instalment Schedule — Tax Year 2026-27 (Section 408)

If a due date falls on a Sunday or public holiday, payment made on the next working day is treated as timely, per longstanding CBDT practice (Circular No. 676, as continued in departmental guidance under the new Act).

How to Compute Your Estimated Tax Liability

To compute advance tax for Tax Year 2026-27:

1. Estimate total income for the full Tax Year (April 2026 – March 2027) — include salary, business income, rental income, estimated capital gains, and other income.
2. Compute gross tax on estimated total income using the Income-tax Act, 2025 slab rates (default regime) or the applicable rate for companies/firms.
3. Deduct TDS/TCS already deducted or expected to be deducted by employers, banks and other deductors for the Tax Year.
4. The balance is your estimated advance tax liability.
5. Pay 15% of that balance by 15 June 2026 as the first instalment (if the balance is ₹10,000 or more).

Example for an Individual (Default Regime, Tax Year 2026-27)

*Note: Interest for shortfall (Section 424) and interest for instalment deferment (Section 425) give limited tolerance — no interest arises on the 1st and 2nd instalments if at least 12% and 36% respectively of the final tax liability have been paid by those dates. Always confirm final figures with your chartered accountant before payment.

How to Pay Advance Tax

Advance tax is paid online through the e-Pay Tax facility on the Income Tax e-filing portal, or through authorised bank branches:

1. Visit www.incometax.gov.in → e-Pay Tax (login is optional; PAN + OTP works for the quick-link route).
2. Select “Income Tax” as the payment type, then choose the applicable law — Income-tax Act, 2025 — for payments relating to Tax Year 2026-27.
3. Select Tax Applicable: Income Tax (for individuals); Company Tax (for companies).
4. Choose minor head “Advance Tax (100)” — not “Self-Assessment Tax (300)”.
5. Enter PAN/TAN and select Tax Year 2026-27 directly on the portal — there is no separate Assessment Year to select for payments under the Income-tax Act, 2025, since the new Act has done away with the AY/PY distinction.
6. Enter the tax, surcharge, cess and interest components, then pay via net banking, UPI, NEFT/RTGS or debit card.
7. Save the CRN (Challan Reference Number), BSR code and challan serial number from the receipt — you will need these details when filing your return.

Note: For Tax Year 2026-27 advance tax payments, select “Tax Year 2026-27” on the portal — do not enter “AY 2027-28”. Using assessment-year references from the old Challan 280 workflow on the new portal can cause a mismatch at the CPC.

Interest Consequences for Short Payment or Non-Payment

Under the Income-tax Act, 2025, two interest provisions apply — re-numbered from, but substantively similar to, the erstwhile Sections 234B and 234C of the 1961 Act:

• Section 424 (default in payment — equivalent to old Section 234B): Interest at 1% per month applies if less than 90% of the assessed tax is paid by 31 March, calculated from 1 April following the Tax Year until the balance is paid.
• Section 425 (deferment of instalments — equivalent to old Section 234C): Interest at 1% per month applies on the shortfall for any instalment where the required cumulative percentage was not paid by that due date — generally for three months for the 1st and 2nd instalments, one month for the 3rd, and until payment for the 4th.

Part of a month is rounded up to a full month, and the tax on which interest is charged is rounded down to the nearest ₹100. Timely payment of each instalment — starting with the 15 June 2026 instalment — avoids these interest charges.

Action Checklist — Before Each Instalment Date

1. Estimate your total income for Tax Year 2026-27.
2. Compute gross tax on estimated income under the applicable regime/rate.
3. Deduct expected TDS/TCS for the Tax Year.
4. If net liability is ₹10,000 or more, compute the cumulative % due for the upcoming instalment.
5. Pay via the e-Pay Tax portal (Income-tax Act, 2025 — Tax Year 2026-27, Advance Tax code 100) on or before the due date.
6. Save the CRN/challan receipt for your records and future return filing.
7. Review and revise your income estimate ahead of the next instalment date.

The information provided herein is for general guidance and informational purposes only. For advice tailored to your specific situation, please consult a qualified Chartered Accountant.