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.

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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.

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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.

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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

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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.

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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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