September 2026 Advance Tax: Due Date, Calculation & Common Filing Mistakes

TL;DR

The September 2026 advance-tax instalment is due on 15 September 2026 for taxpayers liable to pay advance tax for Tax Year 2026–27.

Under the normal instalment schedule, taxpayers should have paid at least 45% of their estimated annual advance-tax liability by 15 September, after considering the amount already paid in the earlier instalment. The Income Tax Department confirms that the advance-tax threshold under the new Income Tax Act, 2025 remains ₹10,000 or more of tax payable during the year.

For Tax Year 2026–27, advance-tax payments are governed by the Income Tax Act, 2025. The new Act has not changed the underlying advance-tax policy; instead, it reorganises the provisions and introduces a formula for computing advance-tax liability under Section 405, while the liability threshold is provided under Section 404.

Introduction

September is an important tax-compliance month for taxpayers whose income is not completely covered through TDS.

If you earn income from business, freelancing, professional services, rent, interest, capital gains, investments or other sources, your employer or payer may not deduct enough tax to cover your final liability. In such cases, the Income Tax Department requires eligible taxpayers to pay tax during the year itself instead of waiting until the income-tax return is filed.

This is where advance tax becomes important.

For Tax Year 2026–27, the September instalment has an additional significance because it is one of the first major advance-tax payments being made under the Income Tax Act, 2025, which came into force from 1 April 2026.

The September deadline is straightforward:

15 September 2026

But the calculation is where many taxpayers make mistakes.

A taxpayer does not simply pay 45% of gross income. Advance tax is calculated after estimating taxable income, applicable deductions, tax rates, surcharge and cess, while also giving credit for eligible TDS/TCS and advance tax already paid.

Understanding the calculation correctly can help avoid unnecessary interest and a large tax payment later.

What Is Advance Tax?

Advance tax is income tax paid during the financial year in instalments based on estimated income for that year.

Instead of calculating the entire tax liability after the year ends, taxpayers estimate their annual taxable income and pay tax progressively.

This system is particularly relevant when income is received from sources such as:

• Business or profession
• Freelancing
• Consultancy
• Rental income
• Interest income
• Capital gains
• Dividends
• Investment income
• Commission
• Other income on which sufficient TDS has not been deducted

For salaried individuals, advance tax is often substantially covered through TDS deducted by the employer. However, additional income can create an advance-tax liability. The Income Tax Department specifically highlights interest, rent, bonds and capital gains as examples of income that may increase the tax payable beyond salary TDS.

September 2026 Advance Tax Due Date

The second instalment of advance tax for Tax Year 2026–27 is due on 15 September 2026.

The normal schedule is:

The September payment is therefore not necessarily 45% of your annual liability as a fresh payment.

It is 45% cumulatively, after reducing the amount already paid in the June instalment. The Income Tax Department’s guidance confirms the 15%, 45%, 75% and 100% cumulative targets.

Example

Suppose your estimated total advance-tax liability for Tax Year 2026–27 is:

₹2,00,000

By 15 June, you should have paid:

15% = ₹30,000

By 15 September, cumulative payment should reach:

45% = ₹90,000

Therefore, the September instalment would be:

₹90,000 − ₹30,000 = ₹60,000

You do not pay another ₹90,000 in September.

Who Needs to Pay Advance Tax?

Under the Income Tax Act, 2025, advance tax becomes applicable where the tax payable for the year, calculated under the advance-tax provisions, is ₹10,000 or more. The threshold remains unchanged from the earlier framework.

This can include taxpayers such as:

Business owners

If your business generates taxable profit and your final tax liability after applicable credits is ₹10,000 or more, advance tax may apply.

Freelancers and consultants

Professionals receiving payments with insufficient TDS can have a significant advance-tax liability.

Investors

Capital gains from:

• Shares
• Mutual funds
• Property
• Other investments

can create additional tax liability during the year.

Landlords

Rental income can increase the overall tax liability beyond salary-related TDS.

Salaried taxpayers with additional income

A salaried person can also become liable if interest, capital gains, rental income or other taxable income creates a substantial tax shortfall after TDS.

Who May Not Need Separate Advance Tax Payment?

If your final tax payable for the year after considering applicable TDS/TCS and other eligible credits is below ₹10,000, the advance-tax obligation generally does not arise under the threshold.

Senior citizens who do not have income from business or profession may also be exempt from advance-tax payment under the applicable provisions.

However, taxpayers should calculate their actual liability rather than assuming that salary status or TDS automatically eliminates advance tax.

How to Calculate September 2026 Advance Tax

The most common mistake is to calculate advance tax directly on gross receipts.

The correct approach starts with estimating your full-year taxable income.

A practical calculation can be structured as follows:

Step 1: Estimate total income for Tax Year 2026–27

Include all expected taxable income from:

• Salary
• Business
• Profession
• Rent
• Interest
• Dividends
• Capital gains
• Other taxable sources

Step 2: Calculate taxable income

Apply the relevant deductions, exemptions and allowable expenses according to the applicable tax regime and nature of income.

Step 3: Calculate income tax

Apply the applicable tax rates to taxable income.

Step 4: Add applicable surcharge and cess

Where applicable, include surcharge and health and education cess.

Step 5: Reduce TDS/TCS credits

Estimate the TDS and TCS that will actually be available as credit.

Step 6: Reduce advance tax already paid

Deduct the advance tax paid in June.

Step 7: Determine September liability

Ensure cumulative advance tax paid by 15 September reaches at least the applicable 45% target.

Simple September Advance Tax Calculation Example

Consider a consultant who estimates the following for Tax Year 2026–27:

The cumulative advance-tax requirement by September is:

45% × ₹2,40,000 = ₹1,08,000

Suppose the taxpayer already paid ₹36,000 in June.

September payment required:

₹1,08,000 − ₹36,000 = ₹72,000

This is why taxpayers should not simply apply 45% to their gross income.

What Changed Under the Income Tax Act, 2025?

One of the most important 2026 developments is that advance tax for Tax Year 2026–27 is now governed by the Income Tax Act, 2025.

The Income Tax Department has specifically clarified that there are no policy changes to advance-tax provisions under the new Act.

Instead:

• The provisions have been reorganised
• Redundant provisions have been removed
• Taxpayer-payment provisions and Assessing Officer directions have been separated
• A formula for computing advance tax has been provided under Section 405

The threshold remains ₹10,000 under Section 404.

This distinction is important because taxpayers searching for advance-tax rules in 2026 may encounter both old and new section numbers online.

Important New Advance Tax Sections in 2026

For Tax Year 2026–27, taxpayers should be familiar with:

The Income Tax Department confirms that Section 424 corresponds to the earlier Section 234B framework and Section 425 corresponds to the earlier Section 234C framework.

Advance Tax and the New Tax Regime

The new tax regime continues under the Income Tax Act, 2025.

For eligible individuals and HUFs, the new regime is the default regime, subject to the applicable provisions and option to opt out. The new Act provides the regime under Section 202.

Therefore, advance-tax calculations should not be based simply on last year’s tax liability.

A taxpayer should estimate the current year’s income and determine tax using the regime applicable to the current Tax Year.

This becomes especially important when income changes significantly during the year.

What If Your Income Changes After September?

Advance tax is based on an estimate.

Your income may change significantly after the September instalment because of:

• A large capital gain
• New business contracts
• Higher professional receipts
• Sale of property
• Higher interest income
• Dividend income
• Bonus or variable compensation
• Unexpected business profits

If your expected taxable income increases, you should revise your advance-tax estimate and adjust later instalments.

The notified advance-tax procedure allows taxpayers to revise their estimate before the last instalment and adjust excess or deficiency through subsequent instalments.

This means taxpayers should recalculate rather than blindly repeat the same instalment amount.

Advance Tax for Capital Gains

Capital gains are one of the biggest reasons advance-tax calculations become difficult.

Suppose an investor earns a large capital gain from selling shares or property after the June instalment.

The additional gain can substantially increase the annual tax liability.

A common mistake is:

“TDS is already being deducted, so I don’t need to pay advance tax.”

This can be incorrect.

If the available TDS/TCS does not sufficiently cover the final tax liability, the taxpayer may need to pay additional advance tax.

The correct approach is to update the estimated annual income after the capital gain and adjust the subsequent instalment accordingly.

Advance Tax for Freelancers and Professionals

Freelancers, consultants, doctors, lawyers, architects, designers, IT professionals and other independent professionals often have multiple clients and varying levels of TDS.

Their advance-tax calculation should consider:

Gross professional receipts − eligible business/professional expenses = estimated taxable professional income

The taxpayer should then consider:

• Other income
• Applicable deductions
• Tax regime
• TDS/TCS
• Previous advance-tax payments

This produces a more realistic estimate of the tax payable.

Advance Tax for Businesses

Businesses should not wait until March to review advance tax.

A better approach is to prepare an estimated profit-and-tax statement every quarter.

Businesses should monitor:

• Revenue
• Gross margin
• Operating expenses
• Depreciation
• Other income
• Capital gains
• TDS/TCS
• Tax payments
• Changes in profitability

If profits rise sharply during the year, the advance-tax estimate should be revised.

Presumptive Taxation: Important Difference

Taxpayers under specified presumptive taxation schemes have a different advance-tax payment schedule.

Under the new Act, taxpayers opting for the presumptive taxation scheme under Section 58 are required to discharge the entire advance-tax liability in a single instalment by 15 March of the relevant financial year, subject to the applicable provisions.

The Income Tax Department confirms that this treatment continues under the new Act.

Therefore, taxpayers under presumptive taxation should not automatically apply the normal 15%-45%-75%-100% instalment schedule.

Common Advance Tax Mistakes in September 2026

Mistake 1: Paying 45% of gross income

Advance tax is based on estimated tax liability, not simply gross income.

Mistake 2: Forgetting TDS credits

If TDS is expected to be available as credit, it should be considered while estimating the remaining advance-tax liability.

Mistake 3: Ignoring capital gains

A major share or property transaction can materially increase annual tax liability.

Mistake 4: Using last year’s tax liability blindly

Current-year income may be significantly different.

Mistake 5: Forgetting interest income

Savings-account interest, fixed deposits, bonds and other interest income can create additional liability.

Mistake 6: Assuming salary TDS covers everything

Salary TDS may not account for other income earned during the year.

Mistake 7: Using the wrong Act during payment

For advance tax relating to Tax Year 2026–27, the applicable law is the Income Tax Act, 2025. For payments relating to earlier assessment years, the old Act may apply.

Mistake 8: Paying but not checking payment status

A taxpayer should verify that the payment is successfully reflected and retain the challan/payment acknowledgement.

The Income Tax Department states that successful payment is reflected in Payment History along with the relevant CIN.

Mistake 9: Creating a challan but assuming payment is complete

Generating a challan is not the same as successfully remitting tax.

The Income Tax Department states that payment is required within 15 days of challan/CRN generation or by 31 March of the current financial year, whichever is earlier, for advance tax.

Mistake 10: Waiting until March after a major income event

If income increases substantially after September, delaying the adjustment until the end of the year can increase the risk of interest liability.

What Happens If You Pay Less Advance Tax?

Under the Income Tax Act, 2025, interest provisions continue to apply when advance-tax obligations are not properly met.

The Income Tax Department states that:

• Section 424 covers interest corresponding to the earlier Section 234B framework.
• Section 425 covers interest corresponding to the earlier Section 234C framework.

The interest rate remains unchanged under the new Act. Section 424 generally involves 1% per month or part of a month for specified failures, while Section 425 provides for applicable interest for deferment of instalments.

This is why advance-tax planning is not merely about meeting a deadline.

It is about ensuring that the cumulative tax paid throughout the year is sufficiently aligned with the eventual tax liability.

September 2026 Advance Tax Checklist

Before making your September payment, review:

☑ Estimated income for April–September 2026

☑ Expected full-year income

☑ Salary income

☑ Business/professional income

☑ Rental income

☑ Interest income

☑ Dividend income

☑ Capital gains

☑ Eligible deductions

☑ Applicable tax regime

☑ TDS/TCS credits

☑ Advance tax already paid in June

☑ Cumulative 45% requirement

☑ Correct Tax Year selected

☑ Income Tax Act, 2025 selected for Tax Year 2026–27

☑ Challan/payment details verified

☑ Payment reflected successfully in tax records

September Advance Tax vs Self-Assessment Tax

These two concepts are often confused.

For Tax Year 2026–27, advance-tax payments are governed by the Income Tax Act, 2025.

What Should Taxpayers Do Before 15 September 2026?

Do not wait until the last day if your income is complex.

A practical approach is:

1. Review April–August income

Check actual receipts rather than relying only on last year’s figures.

2. Project the remaining months

Estimate realistic business, salary, investment and other income.

3. Identify one-time income

Check whether you have realised capital gains, sold property, received bonuses or earned other irregular income.

4. Recalculate tax

Apply the applicable tax regime and current-year provisions.

5. Reconcile TDS/TCS

Do not assume that the full expected TDS will necessarily be available without verification.

6. Calculate the cumulative 45% requirement

Deduct the advance tax already paid in June.

7. Make the payment under the correct Tax Year

For Tax Year 2026–27, the Income Tax Act, 2025 applies.

Frequently Asked Questions

1. What is the September 2026 advance tax due date?

The second instalment of advance tax for Tax Year 2026–27 is due on 15 September 2026.

2. How much advance tax should be paid by September 2026?

Under the normal instalment schedule, cumulative advance tax should reach at least 45% of the estimated annual advance-tax liability by 15 September, after considering the earlier instalment.

3. Is advance tax applicable if my tax liability is ₹10,000?

Under Section 404 of the Income Tax Act, 2025, advance tax is payable where the relevant tax payable under the advance-tax provisions is ₹10,000 or more, subject to applicable exceptions.

4. What is the new section for advance tax under the Income Tax Act, 2025?

Section 404 deals with the liability to pay advance tax, while Section 405 provides the computation framework/formula.

5. Does the Income Tax Act, 2025 change the advance-tax rules?

There is no policy change to advance tax under the new Act. The provisions have mainly been reorganised and simplified, with a computation formula provided in Section 405.

6. Do salaried employees have to pay advance tax?

A salaried employee may not need a separate advance-tax payment if sufficient TDS covers the tax liability. However, additional income such as capital gains, rent or interest can create an advance-tax liability.

7. What happens if I miss the 15 September advance-tax deadline?

A shortfall or deferment can result in interest under the applicable provisions, including Sections 424 and 425 of the Income Tax Act, 2025.

8. How is advance tax calculated after TDS?

Estimate the annual tax liability, reduce eligible TDS/TCS credits and consider advance tax already paid. The remaining amount determines the advance-tax requirement.

9. Is advance tax applicable to capital gains?

Capital gains can increase a taxpayer’s annual tax liability and may therefore create or increase an advance-tax obligation. The calculation should be updated after a significant capital-gains transaction.

10. Which Income Tax Act applies to September 2026 advance tax?

For advance tax relating to Tax Year 2026–27, the Income Tax Act, 2025 applies.

Conclusion

The 15 September 2026 advance-tax deadline is more than another tax-payment date. It is an important checkpoint for taxpayers to reassess their expected tax liability for Tax Year 2026–27.

The key number to remember is 45%.

By 15 September, taxpayers following the normal instalment schedule should have paid at least 45% of their estimated annual advance-tax liability, after considering the amount already paid in June.

The biggest calculation mistakes usually arise from ignoring additional income, capital gains, interest income, TDS credits or changes in business profits.

For 2026, taxpayers should also remember the transition to the Income Tax Act, 2025. Advance tax for Tax Year 2026–27 is governed by the new Act, with the liability threshold under Section 404 and the computation framework under Section 405. The policy itself has not fundamentally changed, but taxpayers now need to use the new statutory framework and terminology.

For businesses, professionals, investors and individuals with complex income, reviewing advance tax before the September deadline can help reduce the risk of interest, cash-flow surprises and incorrect tax payments.

ABSM & Associates can assist taxpayers and businesses with advance-tax calculation, income-tax compliance, tax planning, TDS reconciliation and tax advisory under the Income Tax Act, 2025.

BLOG BY: ABSM & ASSOCIATES

For income tax and GST compliance, see our Taxation Services service.