Advance tax for Tax Year 2026-27 is the first advance-tax cycle governed by the Income Tax Act, 2025. The first instalment falls due on 15 June 2026. The basic idea is familiar: if your estimated tax payable for the year is ₹10,000 or more, you generally pay tax during the year itself instead of waiting until return filing. What has changed is the legal vocabulary and section mapping. For income from April 2026 onward, the correct expression is Tax Year 2026-27, not AY 2026-27.
This guide explains who must pay advance tax under the new Act, the four instalment due dates, the practical meaning of Sections 403, 404, 405, 406, 407 and 408, the interest rules under Sections 424 and 425, the presumptive-taxpayer rule, and the online payment precautions taxpayers should follow during the 2026 transition year.
- Quick summary
- What changed from 1 April 2026?
- What is advance tax?
- Tax Year 2026-27 vs AY 2026-27
- Section-wise practical map
- Advance tax due dates for Tax Year 2026-27
- Who must pay advance tax?
- Senior citizen relief
- Presumptive taxation rule
- How to calculate advance tax
- Practical example
- Section 424 interest for default
- Section 425 interest for deferment
- How to pay advance tax online
- Common mistakes to avoid
- Related DN & CO. reads
- Frequently asked questions
- Official references
- Disclaimer
Quick Summary
| Point | Tax Year 2026-27 Position |
|---|---|
| Applicable law | Income Tax Act, 2025 |
| Income period | 1 April 2026 to 31 March 2027 |
| Advance tax threshold | Payable where tax payable computed under advance-tax provisions is ₹10,000 or more |
| Regular instalments | 15 June, 15 September, 15 December and 15 March |
| Presumptive taxpayers under Section 58 | Generally pay the whole advance tax by 15 March 2027 |
| Main interest sections | Section 424 for default and Section 425 for deferment |
| Most common transition mistake | Choosing AY 2026-27 instead of Tax Year 2026-27 for advance tax on FY 2026-27 income |
What Changed From 1 April 2026?
From 1 April 2026, advance tax on income earned during FY 2026-27 is governed by the Income Tax Act, 2025. The Income Tax Department has clarified that there is no major policy change in the advance-tax framework, but the law has been reorganised and made easier to read.
Practically, this means a taxpayer estimating income for April 2026 to March 2027 should use the new Act references. The payment is not for Assessment Year 2026-27. It is for Tax Year 2026-27. This distinction is very important while selecting the year on the income-tax payment portal.
What Is Advance Tax?
Advance tax means paying income tax during the same year in which income is earned. It is often called the pay-as-you-earn system. Instead of waiting until the return filing stage, the taxpayer estimates income, computes tax, reduces expected TDS/TCS and eligible credits, and pays the balance in instalments.
Advance tax can apply to salaried taxpayers, freelancers, professionals, business owners, companies, firms, investors and other taxpayers if the final tax payable after considering TDS/TCS is ₹10,000 or more. Salary TDS may cover many employees, but advance tax becomes relevant where there is additional income such as interest, rent, capital gains, business profit, professional receipts, dividend or other income.
Tax Year 2026-27 vs AY 2026-27
Under the old Income-tax Act, 1961, taxpayers were used to the terms Financial Year and Assessment Year. The Income Tax Act, 2025 introduces the term Tax Year. The Income Tax Department FAQ states that Tax Year 2026-27 refers to the financial year commencing on 1 April 2026.
| Payment Situation | Correct Selection | Why It Matters |
|---|---|---|
| Self-assessment tax for income earned in FY 2025-26 | AY 2026-27 | The income belongs to the old-law period governed by the Income-tax Act, 1961 |
| Advance tax for income earned from 1 April 2026 to 31 March 2027 | Tax Year 2026-27 | The income belongs to the first tax year under the Income Tax Act, 2025 |
| Old demand, penalty or interest relating to earlier years | Relevant old assessment year | Old liabilities continue, but they should not be mixed with current-year advance tax |
Section-Wise Practical Map
The new Act spreads advance tax provisions across a cleaner set of sections. For day-to-day taxpayer use, the following map is enough:
| Section | Practical Meaning |
|---|---|
| Section 403 | Creates the basic liability to pay advance tax on current income and gives senior citizen relief where conditions are met |
| Section 404 | Advance tax is payable where computed tax payable is ₹10,000 or more |
| Section 405 | Gives the formula for computing advance tax payable: tax on specified sum minus deductible/collectible tax |
| Section 406 | Covers advance tax paid by the assessee on own estimate |
| Section 407 | Covers advance tax payable in pursuance of an Assessing Officer order |
| Section 408 | Gives instalment due dates and percentage requirements |
| Section 424 | Interest where advance tax is not paid or paid below 90% of assessed tax |
| Section 425 | Interest where instalments are deferred or short-paid |
Advance Tax Due Dates for Tax Year 2026-27
Section 408 provides the instalment schedule. For regular taxpayers liable to advance tax, the payments are cumulative. This means by each date you should have paid at least the prescribed percentage of total advance tax for the year.
| Due Date | Cumulative Advance Tax Required | Practical Meaning |
|---|---|---|
| 15 June 2026 | At least 15% | First estimate for the year; review April and May income plus expected annual income |
| 15 September 2026 | At least 45% | Rework the estimate after half-year business, salary, rent, interest and capital gain data becomes clearer |
| 15 December 2026 | At least 75% | Important instalment for businesses and investors because income visibility is much better by this date |
| 15 March 2027 | 100% | Final advance-tax instalment for Tax Year 2026-27 |
Who Must Pay Advance Tax?
Advance tax applies where the estimated tax payable for the tax year, after considering TDS/TCS and eligible credits, is ₹10,000 or more. The rule is not limited to business owners.
Advance Tax May Apply To:
- Salaried taxpayers with significant non-salary income not fully covered by TDS.
- Freelancers and professionals.
- Business owners and firms.
- Companies and LLPs.
- Taxpayers earning rent, interest, dividend or capital gains.
- Non-residents with income taxable in India, subject to applicable TDS and treaty position.
Common Situations Where Salary TDS Is Not Enough
- Large savings account or fixed deposit interest.
- Rental income from house property.
- Capital gains from shares, mutual funds, land or property.
- Freelance income in addition to salary.
- Foreign income taxable in India.
- Business profit started during the year.
Senior Citizen Relief
Section 403 gives relief to a resident individual who is aged 60 years or more at any time during the tax year and does not have income chargeable under the head profits and gains of business or profession. In such a case, the basic advance-tax liability provision does not apply.
Presumptive Taxation Rule
The Income Tax Department FAQ clarifies that taxpayers opting for the presumptive taxation scheme under Section 58 of the Income Tax Act, 2025 must generally pay their entire advance-tax liability in one instalment on or before 15 March of the relevant financial year, as per Section 408(2).
Many taxpayers are used to old-law references like Section 44AD and Section 44ADA. For background on the earlier presumptive framework and its practical record-keeping points, see DN & CO.'s guide on presumptive taxation for AY 2026-27.
How to Calculate Advance Tax
Section 405 uses a simple formula approach. In practical terms, compute tax on your expected income for the tax year and reduce tax expected to be deducted or collected at source, where that income is included in your estimate.
Practical Calculation Steps
- Estimate income from salary, business, profession, rent, interest, capital gains, dividend and other sources.
- Choose the correct tax regime and apply the relevant slab or rate.
- Apply surcharge and cess where applicable.
- Reduce expected TDS, TCS, relief and eligible tax credits.
- If balance tax is ₹10,000 or more, pay advance tax as per the due dates.
- Revise the estimate before every instalment instead of blindly repeating the earlier amount.
Practical Example
Assume a taxpayer estimates total income for Tax Year 2026-27 and the total tax after cess comes to ₹2,40,000. Expected TDS for the year is ₹60,000. The balance advance tax is therefore ₹1,80,000.
| Due Date | Cumulative Requirement | Minimum Cumulative Payment |
|---|---|---|
| 15 June 2026 | 15% of ₹1,80,000 | ₹27,000 |
| 15 September 2026 | 45% of ₹1,80,000 | ₹81,000 total, after reducing earlier payment |
| 15 December 2026 | 75% of ₹1,80,000 | ₹1,35,000 total, after reducing earlier payments |
| 15 March 2027 | 100% of ₹1,80,000 | ₹1,80,000 total, after reducing earlier payments |
If the taxpayer's income estimate changes during the year, the later instalments should be recomputed. Advance tax is an estimate-based system, so a sensible revision is better than paying mechanically.
Section 424 Interest for Default
Section 424 corresponds broadly to the old Section 234B concept. It applies where a taxpayer liable to advance tax fails to pay it, or the advance tax paid is less than 90% of assessed tax. The interest rate is 1% per month or part of a month for the specified period.
Section 425 Interest for Deferment
Section 425 corresponds broadly to the old Section 234C concept. It deals with deferment or short payment of instalments. For regular taxpayers, the law tracks whether the taxpayer paid 15%, 45%, 75% and 100% by the relevant dates.
| Instalment Date | Advance Tax Due on Returned Income | Interest on Shortfall |
|---|---|---|
| 15 June | 15% | 3% on shortfall, subject to relief where at least 12% is paid |
| 15 September | 45% | 3% on shortfall, subject to relief where at least 36% is paid |
| 15 December | 75% | 3% on shortfall |
| 15 March | 100% | 1% on shortfall |
Section 425 also provides relief in certain cases where shortfall arises because income such as capital gains, dividend income or first-time business/professional income could not be estimated earlier, provided tax on that income is paid in the remaining instalments or by 31 March, as applicable.
How to Pay Advance Tax Online
The exact portal screens may change, but the practical workflow remains broadly similar. The most important point in Tax Year 2026-27 is selecting the correct Act and year.
- Visit the income-tax e-filing portal.
- Open the e-Pay Tax option.
- Enter PAN/TAN and verify taxpayer details.
- Select the correct payment category for advance tax.
- For income earned during 1 April 2026 to 31 March 2027, select Tax Year 2026-27 under the Income Tax Act, 2025.
- Enter tax, surcharge, cess and interest breakup carefully, if any.
- Generate the challan/CRN and complete payment through the available mode.
- Download and preserve the challan receipt/CIN.
Common Mistakes to Avoid
- Selecting AY 2026-27 instead of Tax Year 2026-27 for the first new-law advance-tax instalment.
- Ignoring bank interest, rent, dividend or capital gains while estimating tax.
- Assuming salary TDS covers all income automatically.
- Not revising the estimate after a capital gain or major business income change.
- Forgetting that presumptive taxpayers covered by Section 58 generally pay full advance tax by 15 March.
- Paying only tax and forgetting cess or surcharge where applicable.
- Not saving the challan receipt and CIN for reconciliation.
- Using old section references in internal working papers without mapping them to new-law sections.
Related DN & CO. Reads
These DN & CO. articles will help connect advance-tax planning with return filing, tax regime choice and business compliance:
- For old-law return filing and slab planning, read Income Tax Slabs AY 2026-27.
- For the old presumptive framework and practical receipt rules, refer to Presumptive Taxation for AY 2026-27.
- For April 2026 business transition points, see GST and Income Tax Compliance Changes for FY 2026-27.
- For new form numbering under the new law, read New Income Tax Forms 2026 Explained.
- For withholding changes from FY 2026-27, refer to TDS Rate Chart FY 2026-27.
- For deadline monitoring, bookmark the Indian Tax Compliance Deadline Tracker FY 2026-27.
Frequently Asked Questions
1. Which Act applies to advance tax for Tax Year 2026-27?
Advance tax for income earned from 1 April 2026 to 31 March 2027 is governed by the Income Tax Act, 2025.
2. What is the first advance-tax due date for Tax Year 2026-27?
The first instalment is due on 15 June 2026. Regular taxpayers should pay at least 15% of the estimated advance tax by this date.
3. What is the advance-tax threshold under the new Act?
Under the Income Tax Department FAQ, advance tax is payable if the amount of tax payable during the year, computed under the advance-tax provisions, is ₹10,000 or more.
4. Is Tax Year 2026-27 the same as AY 2026-27?
No. Tax Year 2026-27 refers to FY 2026-27 under the Income Tax Act, 2025. AY 2026-27 relates to FY 2025-26 under the old Act.
5. What if I am paying self-assessment tax for FY 2025-26 in June 2026?
That payment relates to AY 2026-27 and should be handled under the Income-tax Act, 1961, not as Tax Year 2026-27 advance tax.
6. Are senior citizens exempt from advance tax?
A resident individual aged 60 years or more who does not have income chargeable under the head profits and gains of business or profession gets relief from the basic advance-tax liability provision. Facts should be checked carefully.
7. What is Section 424 interest?
Section 424 deals with interest for default in payment of advance tax, broadly similar to old Section 234B. It applies where advance tax is not paid or the amount paid is less than 90% of assessed tax.
8. What is Section 425 interest?
Section 425 deals with interest for deferment or short payment of advance-tax instalments, broadly similar to old Section 234C.
9. Do presumptive taxpayers follow four instalments?
The Income Tax Department FAQ states that assessees opting for the presumptive taxation scheme under Section 58 must generally discharge the entire advance-tax liability by 15 March under Section 408(2).
10. Can advance tax paid by 31 March still count?
Section 408 states that any amount paid by way of advance tax on or before 31 March is treated as advance tax paid during the financial year ending on that day. However, instalment interest exposure should still be reviewed.
Official References
- Income Tax Department - Tax Payments FAQ
- Income Tax Department - General Questions FAQ on Tax Year and Act Selection
- Income Tax Act, 2025 - Section 403
- Income Tax Act, 2025 - Section 405
- Income Tax Act, 2025 - Section 408
- Income Tax Act, 2025 - Section 424
- Income Tax Act, 2025 - Section 425
Conclusion
Advance tax for Tax Year 2026-27 is not just another routine payment. It is the first advance-tax cycle under the Income Tax Act, 2025, so the year selection and section references matter. The due dates remain familiar, but the correct terminology is now Tax Year 2026-27 for income earned from 1 April 2026 to 31 March 2027.
The safest approach is to estimate income early, reduce expected TDS/TCS properly, pay instalments by 15 June, 15 September, 15 December and 15 March where applicable, and preserve challan details. If you are a presumptive taxpayer, senior citizen, investor with capital gains or business owner with fluctuating income, review the computation before each instalment instead of treating advance tax as a once-a-year task.