The third instalment of advance tax for the financial year 2025-26 (assessment year 2026-27) is due on Monday, 15 December 2025. In simple terms, if you earn income beyond salary, such as from freelancing, business, rent, or investments, and your total tax bill crosses ₹10,000, you are required to make this advance payment by today to avoid interest charges later. The tax is expected to be paid in advance through scheduled instalments.
Advance tax is payable by both salaried and non-salaried people. While salaried individuals typically pay it through monthly Tax Deducted at Source (TDS), advance tax becomes necessary if the TDS falls short.
How many instalments are there?
Advance tax for individuals is paid in four instalments spread across the financial year. Taxpayers are required to pay a portion of their estimated annual tax liability at each stage. starting from June and ending in March. Here are the deadlines and the portions:
— By 15 June: 15% of estimated tax liability
— By 15 September: 45% of estimated tax liability
— By 15 December: 75% of estimated tax liability
— By 15 March: 100% of estimated tax liability
What happens if you fail to pay advance tax by due date?
If you miss the 15 December advance tax deadline for a given financial year, there is no outright penalty as such under the Income Tax Act, but there will be interest applicable for the shortfall/late payment under section 234C of the Income Tax Act, 1961, according to Suraj Singh, the founder of SD Singh & Associates, Chartered Accountants.
Once the deadline is missed, the person will be charged 1% simple interest per month. The interest is calculated for three months on the shortfall in meeting the 75% advance tax requirement due by December.
Who are exempt from paying advance tax?
Not all taxpayers have to worry about advance tax payment dates if their income is taxable. A major exception applies to senior citizens (aged 60 and above), who receive no income from business or profession.
“These individuals are not required to pay advance tax even if they receive a pension, interest, or capital gains income,” said Namit Saxena, Special Public Prosecutor and Income Tax India official.
Can you pay the rest in one go if you miss the third instalment?
If a taxpayer happens to miss the third payment, which is due on 15 December, they can still pay all the remaining advance tax in one go before the 15 March deadline, said Saxena.
In that case, the cost is largely limited to the interest on the delayed December instalment. As long as the taxpayer ensures that the total advance paid reaches the required level by March, no additional interest is charged for falling short of the year-end target.
How is the interest for delayed advance tax calculated?
The tax on delayed advance payments is largely calculated in two parts.
Section 234C deals with delays by looking into each instalment — June, September, December and March — and levies 1% simple interest per month on the shortfall, based on the prescribed percentage of the total tax that should have been paid by each due date.
Section 234B then comes into play at the end of the financial year if a taxpayer has paid less than 90% of the total tax liability. In such cases, interest is charged at 1% per month on the remaining shortfall, starting from 1 April until the date you actually clear the balance, Saxena said.
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