Advance tax September 15 deadline: Do salaried taxpayers need to pay? Rules, calculation and interest explained

The second instalment of advance tax for the financial year 2026-27 is due on 15 September 2026. For taxpayers who have income from sources beyond salary, the deadline is important because failing to pay the required amount on time can lead to interest.

However, not everyone needs to make an advance-tax payment. The requirement generally applies when the estimated tax liability for the year, after adjusting for tax deducted at source (TDS) and tax collected at source (TCS), exceeds ₹10,000.

CA Chandni Anandan, tax expert at ClearTax, said advance tax is required when a taxpayer's estimated tax liability for the year, after adjusting TDS and TCS, is more than ₹10,000. The tax is paid during the financial year in instalments instead of waiting until the income-tax return is filed.

Resident senior citizens who do not have income from a business or profession are exempt from paying advance tax.

When salaried taxpayers also need to pay

Salaried taxpayers may assume that regular TDS deducted by their employer means they have no advance-tax obligation. This is not necessarily the case.

"If salary is your only income, or your other income is small enough that no more than ₹10,000 of tax remains after TDS, you don't need to pay advance tax," Anandan said.

The situation can change when a taxpayer earns income that is not fully covered by TDS. This could include interest from fixed deposits and savings accounts, rental income, dividends, capital gains from shares or mutual funds, or income from freelance work and a side business.

Once the tax remaining after TDS and TCS exceeds ₹10,000, the taxpayer may need to pay advance tax.

How much advance tax is due by September 15?

Advance tax is paid in instalments during the year. By 15 September, taxpayers are generally required to have paid 45% of their estimated annual tax liability.

Anandan recommends a four-step approach to calculating the September payment.

First, estimate total income for the entire financial year from salary and other sources. Next, calculate the tax under the applicable tax regime, including the 4% health and education cess.

The taxpayer should then subtract TDS and TCS already deducted or collected, as well as advance tax already paid in June. If the remaining liability is more than ₹10,000, the taxpayer needs to ensure that cumulative advance-tax payments reach 45% of the estimated annual liability by 15 September.

For example, if a taxpayer estimates that their final tax liability after accounting for TDS and TCS will be ₹1 lakh, the cumulative advance tax due by 15 September would be ₹45,000. Any advance tax already paid in June would be adjusted against this amount.

What if income comes later in the year?

Taxpayers may find it difficult to estimate income such as capital gains or dividends when these arise later in the financial year.

Anandan said that where capital gains or dividends arise only later in the year, the corresponding tax can be paid with the next advance-tax instalment without attracting interest for the earlier instalment.

This is particularly relevant for investors whose taxable capital gains become known only after they sell shares or mutual fund units.

What happens if you miss the September 15 deadline?

Missing the instalment or paying less than the required amount can result in interest.

Under the Income Tax Act, 2025, interest for deferment of advance tax is covered under Section 425, corresponding to the earlier Section 234C. The interest is charged at 1% per month.

For the September instalment, the interest period is three months. Therefore, a taxpayer who has a shortfall against the required 45% cumulative payment could face interest of roughly 3% on the shortfall.

There is another potential interest liability if the taxpayer's overall advance-tax payments for the year are too low. If total advance tax paid is less than 90% of the final tax liability, interest under Section 424, corresponding to the earlier Section 234B, can apply at 1% per month from the beginning of the following tax year until the tax is paid.

What taxpayers should do before September 15

Taxpayers with income beyond salary should review their estimated income for the full year rather than looking only at their monthly earnings.

They should also check TDS and TCS already reflected against their PAN and account for advance tax paid in June. Investors should factor in realised capital gains, while taxpayers earning interest, rent, dividends or freelance income should include these sources in their annual estimate.

The key point is that the September 15 deadline does not mean every taxpayer has to make a payment. The requirement depends on the estimated tax liability remaining after TDS and TCS. For those who cross the ₹10,000 threshold, however, ensuring that cumulative advance-tax payment reaches 45% by the September deadline can help avoid interest on a shortfall.