Who must pay by 15 December 2026? Anyone whose estimated tax for FY 2026-27, after TDS and TCS, is Rs 10,000 or more must have paid at least 75% of that tax in total by 15 December 2026 (Section 408 of the Income-tax Act, 2025). Subtract what you paid in June and September; the balance is your December payment. Resident senior citizens without business income are exempt, and 44AD/44ADA presumptive taxpayers pay everything by 15 March 2027. A shortfall costs 3% interest under Section 425 (old Section 234C).
By the June and September deadlines most taxpayers are working from rough guesses. By December, eight months of the year are behind you. You know whether your income has grown, whether you sold shares or property, and whether TDS is actually covering your tax. That is why the December instalment is the one where underestimates usually show up.
This guide covers who must pay the third instalment for FY 2026-27, how to work out the amount, the interest if you fall short, and the exemptions that take some taxpayers out of the December date altogether. FY 2026-27 is the first year governed by the Income-tax Act, 2025, so the section numbers below are from the new Act, with the old 1961 Act numbers in brackets for reference.
What Is the 15 December Advance Tax Instalment?
Advance tax is income tax paid during the year in which you earn the income, instead of in one lump sum when you file the return. Most taxpayers pay it in four instalments under Section 408 of the Income-tax Act, 2025 (old Section 211).
The third instalment is due on or before 15 December 2026. The rule is not that you pay 75% of your tax in December. The rule is that your total payments by 15 December must reach at least 75% of your estimated advance tax for the year.
| Instalment | Due date | Cumulative amount to be paid |
|---|---|---|
| First | 15 June 2026 | At least 15% |
| Second | 15 September 2026 | At least 45% |
| Third | 15 December 2026 | At least 75% |
| Fourth | 15 March 2027 | 100% |
Source: Section 408(1), Income-tax Act, 2025.
For the full calendar and how each date works, see our guide to advance tax due dates for FY 2026-27.
Worked Example: Cumulative 75%
Say your estimated tax for FY 2026-27, after reducing TDS and TCS, is Rs 1,20,000, and you paid exactly on schedule in June and September.
| Particulars | Amount |
|---|---|
| Estimated advance tax for the year | Rs 1,20,000 |
| 75% to be paid in total by 15 December | Rs 90,000 |
| Paid by 15 June (15%) | Rs 18,000 |
| Paid by 15 September (Rs 54,000 in total, so Rs 36,000 more) | Rs 36,000 |
| Total paid before December | Rs 54,000 |
| Balance payable by 15 December | Rs 36,000 |
If you paid more than 45% by September, your December payment is lower. If you paid less, you make up the gap now: the December payment brings your total to 75%, whatever was missed earlier.
Who Must Pay the December Instalment?
Under Section 404 of the 2025 Act (old Section 208), advance tax is payable when the tax for the year, worked out as tax on estimated income minus TDS and TCS (Section 405), is Rs 10,000 or more. It is not limited to business owners. Any individual, HUF, firm, LLP or company can be covered.
| Taxpayer | December instalment applies? |
|---|---|
| Salaried employee whose TDS covers all tax | Usually no |
| Salaried employee with FD interest, rent, capital gains or side income | Yes, if tax after TDS is Rs 10,000 or more |
| Freelancers, consultants, professionals (regular books) | Yes |
| Business owners, firms, LLPs, companies | Yes |
| Investors with capital gains already made this year | Yes |
| Landlords with rental income | Yes, if tax after TDS is Rs 10,000 or more |
| Resident senior citizen (60+) with no business or professional income | No, exempt |
| Presumptive income under old 44AD or 44ADA | No, single payment by 15 March 2027 |
| Goods carriage operators under old 44AE | Yes, normal four instalments |
Sources: Sections 403, 404, 405 and 408, Income-tax Act, 2025.
Salaried Employees With Other Income
Your employer deducts TDS on salary, so for most employees advance tax never comes up. It becomes relevant when you earn income on which TDS is lower than your slab rate, or nil:
- Fixed deposit interest: banks deduct TDS at 10%, even if you fall in the 30% slab. See TDS on bank FD interest for FY 2026-27.
- Rent: where a tenant deducts TDS at all, the rate under Section 393 is 2% (individual tenants paying over Rs 50,000 a month) or 10% (other specified payers, for land or building).
- Dividends: TDS at 10%.
- Fees for professional services: TDS at 10% (2% for technical services).
- Capital gains on listed shares and mutual funds: no TDS for residents.
Example: you are in the 30% slab and earn Rs 5,00,000 of FD interest. Tax on it is Rs 1,50,000, plus 4% cess = Rs 1,56,000. The bank deducts Rs 50,000. The remaining Rs 1,06,000 is well above Rs 10,000, so advance tax applies, and Rs 79,500 of it (75%) should be paid in total by 15 December.
To find your slab rate first, use the income tax slab rates for FY 2026-27.
Senior Citizens: Exempt Without Business Income
Under Section 403(3) of the 2025 Act (old Section 207(2)), an individual who is resident in India, 60 or older at any time during the tax year, and has no income under the head "Profits and gains of business or profession" does not pay advance tax.
- A retired pensioner with FD interest: exempt.
- A senior citizen with rent and capital gains: exempt.
- A senior citizen who earns consulting fees or runs a business: not exempt. The normal four instalments apply.
An exempt senior citizen pays the whole tax as self-assessment tax before filing the return. More on this in our guide to senior citizen income tax benefits for AY 2026-27.
Presumptive Taxpayers: One Payment in March
Under Section 408(2), an assessee who declares income under Section 58(2), Table Sl. No. 1 or 3 of the 2025 Act (old Section 44AD for businesses and Section 44ADA for professionals) pays the whole advance tax by 15 March 2027. Such taxpayers have nothing to pay on 15 December.
One common mistake: goods carriage operators under old Section 44AE (Section 58(2), Table Sl. No. 2) are not covered by the single-payment rule. They follow the normal schedule, so the 75% target on 15 December applies to them.
What Happens If You Miss the 15 December Deadline?
The tax remains payable, and you pay interest for the delay under Section 425 of the 2025 Act (old Section 234C).
Section 425 Interest on a December Shortfall
If the advance tax paid by 15 December is less than 75% of the tax due on your returned income, you pay interest of 3% on the shortfall. The 1961 Act expressed this as 1% a month for three months; the 2025 Act states the same charge as a flat 3% in the Section 425 table.
Note that the base is the tax due on the income you finally declare in your return (after TDS and TCS), not the estimate you made in December.
| Particulars | Amount |
|---|---|
| Tax due on returned income | Rs 1,20,000 |
| 75% of that tax | Rs 90,000 |
| Advance tax paid by 15 December | Rs 70,000 |
| Shortfall | Rs 20,000 |
| Interest at 3% | Rs 600 |
The full method, including the June, September and March slabs, is in our guide to Section 234B and 234C interest calculation.
No 12% or 36% Tolerance in December
Section 425(2) waives interest if you paid at least 12% by 15 June or at least 36% by 15 September. There is no similar tolerance for 15 December. Anything short of 75% of the tax due on returned income attracts interest.
Relief for Capital Gains and Dividends Arising Later
Section 425(4) gives relief that matters in December. No interest is charged on a shortfall caused by underestimating, or not estimating:
- capital gains,
- income under Section 2(49)(n) (winnings from lotteries, crossword puzzles, games and similar),
- business or professional income arising for the first time, or
- dividend income,
provided you pay the full tax on that income in the remaining instalments, or by 31 March 2027.
So if you sell shares in January 2027, you do not owe December interest on that gain, as long as you pay the tax on it by 15 March (or at the latest 31 March). But gains you have already made before 15 December should go into your December estimate. For rates by asset type, see the capital gains tax guide.
Section 424: The Separate Year-End Test
Section 424 of the 2025 Act (old Section 234B) is a different charge. If advance tax paid by 31 March 2027 is less than 90% of the assessed tax, you pay simple interest at 1% for every month or part of a month from 1 April 2027 until your income is determined or assessed.
A December shortfall on its own triggers only Section 425. If you make it up by 15 March, Section 424 does not come into play. It applies only if the gap is still there at year end.
How to Recalculate Your Liability Before 15 December
December is the right time to revisit your estimate. Section 406(2) lets you increase or reduce the remaining instalments to match a revised estimate of your income.
| Step | What to do |
|---|---|
| 1 | Add up actual income for April to November 2026 |
| 2 | Project income for December 2026 to March 2027 |
| 3 | Add capital gains already made this year |
| 4 | Compute tax on the projected total income, including cess and any surcharge |
| 5 | Subtract TDS and TCS for the year |
| 6 | Take 75% of the balance |
| 7 | Subtract advance tax already paid in June and September |
| 8 | Pay the remainder by 15 December 2026 |
You can run these numbers in our advance tax estimator. Before you finalise, check your Form 26AS and AIS for TDS actually credited; our guide on AIS, Form 26AS and TIS explains where to look.
Income That Often Changes the December Figure
| Income | Why it changes the December amount |
|---|---|
| FD and other interest | TDS of 10% is below the 20% or 30% slab |
| Capital gains | No TDS for residents on listed shares and mutual funds |
| Rent | TDS of 2% or 10%, or none at all, is below most slab rates |
| Dividends | TDS of 10% is below higher slabs |
| Professional fees | TDS of 10% is below the 30% slab |
| Business income | No TDS on most sales; the full tax falls on you |
How to Pay the December Instalment
- Go to the e-Filing portal at incometax.gov.in and open e-Pay Tax.
- Choose New Payment and select Income Tax.
- Select assessment year 2027-28, which covers income of FY 2026-27 (tax year 2026-27).
- Choose Major Head 0021 (individuals, HUFs, firms; companies use 0020) and Minor Head 100 (Advance Tax).
- Enter the amount and pay through net banking, debit card, or the payment gateway.
- Download the challan receipt with the CIN and keep it for your return.
Selecting Minor Head 300 (self-assessment tax) or the wrong assessment year is a common error. Our step-by-step guide on paying advance tax online covers challan correction if this happens.
December Instalment: Key Points
| Point | Detail |
|---|---|
| Due date | 15 December 2026 |
| Target | 75% of estimated advance tax, in total |
| Who pays | Anyone with tax of Rs 10,000 or more after TDS and TCS |
| Senior citizens (60+, resident) | Exempt if no business or professional income |
| 44AD / 44ADA presumptive | Whole amount by 15 March 2027 |
| 44AE goods carriage | Normal four instalments |
| Interest for shortfall | 3% under Section 425 (old 234C) |
| Tolerance | None for December (12% and 36% only for June and September) |
| Year-end interest | 1% a month under Section 424 (old 234B) if under 90% paid by 31 March |
| Payment | e-Pay Tax, AY 2027-28, Minor Head 100 |
Where Tax Garden Helps
Estimating advance tax is not a one-time job. Income changes during the year, TDS rarely matches your slab, and December is where a low estimate becomes interest. Tax Garden can:
- estimate your tax for FY 2026-27 from actual income to date,
- work out the December payment after TDS, TCS and earlier instalments,
- check whether you qualify for the senior citizen exemption or the single-payment presumptive rule,
- plan tax on capital gains made during the year, and
- reconcile advance tax challans with Form 26AS and AIS before you file.
Sources: Income-tax Act, 2025 as amended by the Finance Act, 2026: Section 403 (liability for advance tax and senior citizen exemption), Section 404 (Rs 10,000 limit), Section 405 (computation after TDS and TCS), Section 406 (payment on own estimate and revision), Section 408 (instalments and due dates), Section 424 (interest for default in payment of advance tax), Section 425 (interest for deferment of advance tax), Section 58(2) (presumptive income) and Section 393 (TDS rates); Income-tax Act, 1961 Sections 207, 208, 211, 234B and 234C for the earlier numbering; e-Pay Tax service on incometax.gov.in. This article is general information, not professional advice. Check incometaxindia.gov.in for any later amendment before paying.
Frequently Asked Questions
What is the due date for the third advance tax instalment for FY 2026-27?
The third instalment is due on or before 15 December 2026. By that date your total advance tax paid during the year must reach at least 75% of your estimated advance tax for FY 2026-27 (tax year 2026-27), under Section 408 of the Income-tax Act, 2025.
How much advance tax do I pay by 15 December?
Take 75% of your estimated advance tax for the year and subtract what you already paid by 15 June and 15 September. The balance is your December payment. The 75% is a cumulative target, not a fresh 75% on top of earlier instalments.
Who has to pay advance tax in December 2026?
Any assessee whose estimated tax for the year, after reducing TDS and TCS, is Rs 10,000 or more (Section 404 of the Income-tax Act, 2025). That includes salaried people with large interest, rent or capital gains, freelancers, business owners, firms and companies. Resident senior citizens without business income and taxpayers declaring presumptive income under 44AD or 44ADA do not pay in December.
Are senior citizens exempt from advance tax?
A resident individual aged 60 or more at any time during the tax year who has no income under the head profits and gains of business or profession does not pay advance tax (Section 403(3) of the Income-tax Act, 2025, earlier Section 207(2) of the 1961 Act). They pay the whole tax as self-assessment tax before filing the return. A senior citizen with business or consulting income must pay advance tax normally.
Do presumptive taxpayers pay advance tax on 15 December?
Taxpayers declaring presumptive income under old Section 44AD (business) or 44ADA (professionals), now Section 58(2) Table Sl. No. 1 and 3 of the 2025 Act, pay the whole advance tax in one instalment by 15 March 2027 under Section 408(2). Goods carriage operators under old Section 44AE (Sl. No. 2) are not covered by this rule and follow the normal four instalments, including 15 December.
What is the interest if I miss the December advance tax instalment?
Under Section 425 of the Income-tax Act, 2025 (old Section 234C), you pay interest of 3% on the shortfall between what you paid by 15 December and 75% of the tax due on your returned income. This is the same as 1% a month for three months. On a shortfall of Rs 20,000 the interest is Rs 600.
Is there a 12% or 36% style tolerance for the December instalment?
No. The 12% tolerance applies only to 15 June and the 36% tolerance only to 15 September (Section 425(2) of the 2025 Act). For 15 December the full 75% of tax due on returned income must be paid to avoid interest.
I sold shares after 15 December. Do I pay interest for the December instalment on that gain?
No. Under Section 425(4) of the 2025 Act, no deferment interest is charged on a shortfall caused by capital gains, dividend income, lottery and similar winnings, or business income arising for the first time, if you pay the full tax on that income in the remaining instalments or by 31 March 2027. Gains made before 15 December should be included in your December estimate.
How is Section 424 interest different from Section 425 interest?
Section 425 (old 234C) charges interest for paying an instalment late or short during the year. Section 424 (old 234B) charges 1% a month from 1 April 2027 if total advance tax paid by 31 March 2027 is less than 90% of assessed tax. A December shortfall that you make up by 15 March triggers only Section 425; if it remains unpaid at year end, Section 424 can apply as well.
Can I reduce my advance tax in December if my income has fallen?
Yes. Section 406(2) of the 2025 Act lets you increase or reduce the remaining instalments to match your revised estimate of current income. If income has fallen, pay only up to 75% of the revised estimate. Interest is finally worked out on the tax due on your returned income, so a realistic estimate matters more than the first one you made.
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