15 December Advance Tax Deadline: How Much to Pay and Consequences of Late Payment

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The third instalment of advance tax for the financial year 2025–26 (Assessment Year 2026–27) is due on December 15. Taxpayers whose total tax liability exceeds ₹10,000 for the year are required to pay income tax in advance through prescribed instalments.

The December deadline is critical, as taxpayers must have paid at least 75% of their estimated annual tax liability by this date. Failure to meet this requirement results in mandatory interest under Section 234C of the Income-tax Act, even if the remaining tax is paid later while filing the income tax return.

“The 15 December advance tax deadline is a crucial checkpoint. By this date, taxpayers should have discharged at least 75% of their estimated tax liability. Any shortfall attracts interest under Section 234C, irrespective of subsequent payment at the time of return filing,” said Avnish Arora, Executive Director – Direct Tax, Forvis Mazars India.

Who Is Required to Pay Advance Tax?

Advance tax is applicable to both salaried and non-salaried taxpayers if their estimated tax liability, after adjusting for TDS, exceeds ₹10,000 in a financial year.

• Salaried individuals generally meet this obligation through monthly TDS deducted by employers.

• Advance tax becomes necessary when TDS is insufficient, such as in cases of:

  • Capital gains

  • Interest income

  • Rental income

  • Freelance or professional income

  • Business profits

Who Is Exempt?

• Resident senior citizens (aged 60 years or above) who do not have income from business or profession are exempt from paying advance tax.

How Much Advance Tax Should Have Been Paid by Now?

The Income-tax Department has prescribed the following advance tax schedule:

• By June 15 – 15% of estimated tax liability

• By September 15 – 45% of estimated tax liability

• By December 15 – 75% of estimated tax liability

• By March 15 – 100% of estimated tax liability

The December 15 deadline is especially important for freelancers, investors, consultants, and small business owners, as their income is often not subject to regular TDS deductions.

Why Timely Payment Matters

Advance tax applies to all types of income. Any remaining tax after adjusting advance tax payments, TDS, and eligible credits must be paid as self-assessment tax at the time of filing the return.

However, delaying advance tax payments can result in:

• Interest for shortfall or deferment

• Increased lump-sum tax outgo at the time of return filing

What Happens If You Miss the December 15 Deadline?

• If less than 75% of the estimated tax liability is paid by December 15, interest under Section 234C is levied at 1% per month for three months (December to March) on the shortfall.

• If less than 90% of the total tax liability is paid by March 31, interest under Section 234B applies at 1% per month until the outstanding tax is fully paid.

How to Pay Advance Tax

Taxpayers can pay the third instalment of advance tax by:

• Logging into incometax.gov.in, or

• Using net banking through authorised banks

Delaying payment until March can significantly increase the interest burden, making timely compliance the more cost-effective option.
 

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