Is missed advance tax a penalty or interest?

Interest, not a penalty. Section 425 of the Income-tax Act, 2025 (old 234C) charges 1% a month, simple, on the shortfall at each due date. Because it is interest on a shortfall, paying more at the next date stops the interest growing but does not cancel what has already built up.

I sold shares or a property after September. When do I pay tax on the gain?

In the instalments that are still left. Interest relief is available on income that arises after an instalment date, such as capital gains, dividends or lottery winnings, as long as you pay the extra tax in the remaining instalments or by 31 March. If the gain arises after 15 December, pay it by 15 March. Check the details with a CA if the amount is large.

Can I pay the whole year's advance tax in December?

You can, and paying by 15 December means no interest for the December date. But the June and September shortfalls are worked out on those dates and stay charged, at 3% of the shortfall each. In the worked example above, that is ₹4,491 for September alone.

Advance Tax Due 15 December 2026: Who Pays and How Much

The third advance tax instalment for FY 2026-27 is due on 15 December 2026. By that date you should have paid 75% of the year's tax in total, counting anything already paid in June and September. This post covers who has to pay, how much, and what happens if you are already behind.

This is informational, not tax advice. Check figures against your own income and, for larger amounts, with a CA.

Who has to pay advance tax

You have to pay advance tax if your tax for the year, after TDS and TCS, is ₹10,000 or more. That usually means:

Freelancers, consultants and business owners, whose clients pay them without full TDS.
Landlords and people with large interest income.
Investors with capital gains or dividends.
Salaried people with enough side income to push the tax above what their employer deducts.

Resident senior citizens aged 60 or more are exempt unless they have business or professional income. Most salaried employees don't pay it, because their employer deducts TDS every month.

The four instalments

The percentages are cumulative, not per instalment.

Due date	Total paid by then	Interest months if you are short
15 June 2026	15%	3
15 September 2026	45%	3
15 December 2026	75%	3
15 March 2027	100%	1

No interest is charged for June if you paid at least 12%, or for September if you paid at least 36%. There is no such cushion for December: you need the full 75%.

If you declare business or professional income under the presumptive scheme (section 58, the old 44AD and 44ADA), you pay everything in one instalment by 15 March instead, and the December date doesn't apply to you. The presumptive tax calculator works out that amount.

Worked example: a freelancer with ₹30 lakh profit

A freelancer expects ₹30,00,000 of profit this year, with no salary and no TDS. Tax under the new regime is ₹4,80,000, and with 4% cess it comes to ₹4,99,200.

Due date	Cumulative amount due
15 June	₹74,880
15 September	₹2,24,640
15 December	₹3,74,400
15 March	₹4,99,200

Suppose they paid ₹74,880 in June and nothing in September.

June: paid in full, no interest.
September: short by ₹1,49,760. Interest is worked out on the shortfall rounded down to the nearest ₹100, so ₹1,49,700 at 3%, which is ₹4,491. That is now fixed.
December: if they pay ₹2,99,520 by 15 December, the total reaches ₹3,74,400 (75%) and no interest is added for December.
March: the last ₹1,24,800 is due by 15 March 2027.

The lesson is that paying late costs a fixed 3% of what you were short on each date, so catching up on 15 December is much better than leaving the balance for March.

A related interest: paying less than 90% by 31 March

Separately from the instalment interest, if your advance tax and TDS together are below 90% of the year's tax on 31 March, section 424 (the old 234B) charges a further 1% a month from April until you pay the balance. Keeping to the schedule avoids both.

What to do this month

Estimate your income for the full year, not just the year so far.
Work out the year's tax, subtract TDS already deducted or expected, and take 75% of the rest.
Subtract what you have already paid as advance tax. The difference is your December payment.
Pay through the e-Pay Tax service on the income tax portal, choosing advance tax, and keep the challan.

The Advance Tax Calculator does steps 2 and 3, shows the interest for any date you have already missed, and prints the amount to pay by each date. For the tax itself, see the Income Tax Calculator. If your clients deduct TDS from your fees, check the rate with the TDS Calculator so your estimate is right.