The 15 September Advance Tax Instalment: What You Owe and What Missing It Costs

Advance tax is the least understood obligation in Indian personal taxation, and it catches the same three groups every year: freelancers, people with meaningful capital gains, and salaried employees who quietly earn something on the side. All three tend to discover it in June, in the assessment year, when the interest has already accumulated.

This is what the 15 September deadline actually requires, how to work out your own number in about ten minutes, and exactly what it costs if you decide to ignore it.

Who has to pay, and who genuinely does not

You owe advance tax if your estimated tax liability for the year, after subtracting TDS and TCS already deducted, exceeds ₹10,000. That is the whole test. It has nothing to do with whether you are salaried, self-employed, or retired.

Two groups are outside it:

• Resident senior citizens aged 60 and above who have no income from business or profession. A retired person living on pension, interest and rent pays nothing in advance, however large the bill. The moment there is professional income, the exemption is gone.
• Anyone whose liability after TDS is ₹10,000 or less. Most purely salaried people fall here, because the employer has already deducted against the full year's salary.

The four dates, and what each one demands

Advance tax is cumulative. Each date asks for a running total of the year's expected tax, not a fresh quarterly slice.

Read the second row carefully, because this is where most people misread the rule. On 15 September you are not paying 30% to top up June's 15%. You are being asked to have 45% of the whole year's tax already in the government's hands — six and a half months before the financial year ends, on income you have not finished earning.

That is deliberate. The scheme is called pay-as-you-earn for a reason, and the estimate is meant to be forward-looking.

Working out your own number in ten minutes

You do not need a chartered accountant for this. You need an honest estimate and a calculator.

Step 1 — Estimate total income for the whole year

Add everything you expect between 1 April 2026 and 31 March 2027: salary, professional receipts, interest, rent, dividends, and realised capital gains. Use what you have actually earned so far and project the rest at the same run rate. If you are a freelancer with lumpy income, be slightly generous rather than slightly optimistic — overpaying costs you nothing but timing, while underpaying costs 1% a month.

Step 2 — Compute the tax on it

Apply the regime you are actually going to use. Under the new regime the deductions are few and the arithmetic is quick; under the old one, subtract your genuine 80C, 80D and HRA claims first. If you are unsure which applies to you, the side-by-side comparison with worked examples settles it in a few minutes, and the free regime calculator does the arithmetic for you.

Add health and education cess at 4%. Add surcharge if your income crosses ₹50 lakh.

Step 3 — Subtract TDS and TCS

Everything already deducted at source counts. Check Form 26AS and the Annual Information Statement on the income tax portal rather than guessing — clients deduct 194J at 10% on professional fees and often forget to tell you.

Step 4 — Take 45% of what is left, subtract what you paid in June

That is your 15 September payment. Pay it as challan ITNS 280, minor head 100 (Advance Tax), assessment year 2027-28. Getting the assessment year wrong is the single most common clerical error, and it puts the money in the wrong bucket.

The safe harbour almost nobody mentions

The law contains a tolerance that removes a great deal of anxiety about imperfect estimates.

This exists because the first two estimates are genuinely difficult — in June you have almost no information about the year ahead. The tolerance is not extended to the December and March instalments, where the law expects you to know your own income.

The practical consequence: if your full-year tax works out at ₹2,00,000, the number that protects you on 15 September is ₹72,000 paid cumulatively, not ₹90,000. If you land between the two you owe nothing extra. Below ₹72,000 and interest is charged on the shortfall from the full 45%, not from the 36% floor.

What missing it actually costs: the arithmetic

Take a freelance consultant whose tax for FY 2026-27 works out at ₹1,20,000 after all TDS credit. She pays nothing in advance and clears the entire bill when she files in July 2027.

Then section 234B arrives on top. If less than 90% of the total tax has been paid through advance tax and TDS by 31 March 2027, a further 1% per month runs from 1 April 2027 until the tax is actually paid. File in July 2027 and that is four more months on ₹1,20,000 — another ₹4,800.

Roughly ₹10,860 of pure interest on a ₹1,20,000 bill. Just over 9%, for doing nothing except paying late. No bank is lending you money at that rate to keep the cash in your account.

The same person, paying on time

₹18,000 in June, ₹36,000 in September, ₹36,000 in December, ₹30,000 in March. Interest: nil. The total tax is identical. Only the timing changed.

If you are on presumptive taxation, this date does not apply to you

Taxpayers under section 44AD (small business, 8% or 6% presumptive) or section 44ADA (professionals, 50% presumptive) are outside the four-instalment schedule entirely. They pay the whole of their advance tax in a single instalment by 15 March 2027.

This is a genuine simplification and one of the better reasons to be on 44ADA if you qualify. It is also widely misunderstood: the concession is about timing, not amount. The full liability still has to be there by 15 March, and if it is not, 234C applies to that single instalment.

Whether you actually qualify for 44ADA is a separate question with real conditions attached — the gross-receipts ceiling, the nature of the profession, and the consequences of opting out later. The freelancer tax guide works through who is genuinely eligible.

Five mistakes that cost real money

1. Paying under the wrong assessment year

For income earned in FY 2026-27, the assessment year is 2027-28. Every year a large number of challans are filed against AY 2026-27 by reflex. The money is not lost, but correcting it means a challan correction request and weeks of delay while interest keeps running against the year you actually owe.

2. Selecting the wrong minor head

Advance tax is minor head 100. Self-assessment tax is 300. Tax on regular assessment is 400. Pay advance tax under 300 and it will not be treated as advance tax for 234C purposes.

3. Forgetting capital gains until March

Capital gains are notoriously hard to predict, which is why the law contains a specific relief: if a gain arises after an instalment date, no 234C interest is charged for the earlier instalments provided the tax on it is paid in the remaining instalments, or by 31 March. Sell shares in November and you are not penalised for June and September. Sell in April and forget about it until March, and you are.

4. Assuming TDS covers everything

A client deducting 10% under section 194J has covered 10% of your gross receipts. If your effective rate is 20%, half your liability is still outstanding and the entire gap is your advance tax obligation.

5. Waiting for a reminder

There is no reminder. The department does not write to you before an instalment date. Nothing at all happens on 16 September except that interest quietly begins to accrue.

What to do in the next ten days

1. Pull your Form 26AS and AIS from the income tax portal. Ten minutes, and it tells you exactly what has already been credited against your PAN.
2. Estimate the full year honestly. Nine months of visibility is enough to project the remaining three.
3. Compute 45%, or 36% if you want the floor. Subtract June's payment and anything already deducted.
4. Pay by 15 September through the e-Pay Tax facility on the portal — challan 280, minor head 100, AY 2027-28.
5. Save the challan receipt. The BSR code, challan serial number and date go into your return next year, and reconstructing them in July is unpleasant.

The bottom line

Advance tax is not an extra tax. It is the same tax, paid on a schedule, and the entire penalty regime exists to enforce the schedule rather than the amount. The cost of ignoring it is about 9% of your bill in a typical case — not catastrophic, but a pointless donation.

Ten days is enough. Pull the AIS, make an honest estimate, pay 45% — or 36% if the estimate is shaky — and the September instalment stops being something you think about.

Frequently asked questions