The second advance-tax instalment for the 2026–27 tax year was due on 15 September 2026. By this date, eligible taxpayers were generally required to pay at least 45% of their estimated annual advance-tax liability, after accounting for taxes already deducted or collected and eligible credits.
This deadline can be particularly relevant for investors earning income from capital gains, dividends, fixed deposits, bonds, unlisted shares, rent or other sources where tax may not be fully covered through salary TDS.
According to the Income Tax Department, advance tax generally becomes applicable when the estimated tax payable for the year is ₹10,000 or more. Resident senior citizens who do not earn income from a business or profession are generally exempt from paying advance tax.
What Is Advance Tax?
Advance tax is the payment of estimated income tax during the tax year instead of paying the entire amount when filing the income-tax return.
It is not an additional tax. It is simply the taxpayer’s estimated annual liability paid in instalments.
For most eligible taxpayers, advance tax is generally payable according to the following cumulative schedule:
By 15 June: At least 15%
By 15 September: At least 45%
By 15 December: At least 75%
By 15 March: 100%
The percentages are cumulative. Therefore, 45% by September does not mean paying another 45% after the June instalment. It means total advance-tax payments made by 15 September should generally reach at least 45% of the estimated annual liability.
Who May Need to Pay Advance Tax?
Advance tax can apply to salaried employees, self-employed professionals, business owners, investors, landlords and other taxpayers if their estimated tax payable crosses the applicable threshold after adjusting for tax already deducted or collected.
A salaried investor may assume that the employer’s TDS covers the entire tax liability. That may not be correct when the investor also earns substantial income from:
Sale of listed shares
Sale of mutual-fund units
Unlisted or pre-IPO shares
Dividend income
Fixed deposits
Corporate or government bonds
Rental property
Foreign investments
Other taxable income
If this additional income is not fully covered by TDS, an advance-tax obligation may arise.
Which Types of Investment Income Should Be Included?
Capital Gains
Profits from selling shares, mutual funds, property, unlisted securities or other capital assets may create a tax liability.
The applicable tax treatment can depend on:
Type of asset
Holding period
Date of acquisition and sale
Whether the security is listed or unlisted
Applicable tax rate
Availability of exemptions or loss set-offs
Capital gains can be difficult to estimate at the beginning of the year because the investor may not know when an asset will be sold or what gain will be realised.
Tax rules generally recognise the unpredictable nature of certain income, including capital gains. The investor may be able to account for such income in the advance-tax instalment falling after the gain arises, subject to the applicable conditions.
This does not mean capital gains can be ignored until the income-tax return is filed. Once the gain is realised, investors should reassess their tax estimate promptly.
Dividend Income
Dividend income is taxable in the hands of the investor at the applicable rate. Although TDS may be deducted in certain cases, the deduction may not cover the investor’s complete tax liability.
Investors with significant dividend income should compare:
Total dividends received or expected
TDS already deducted
Applicable tax rate
Other taxable income
Remaining advance-tax obligation
Interest From Fixed Deposits
Banks may deduct tax on fixed-deposit interest, but TDS and final tax liability are not necessarily the same.
For example, an investor in a higher tax bracket may still have an additional liability after adjusting for TDS. Interest is generally taxable based on applicable tax rules even when it is reinvested rather than withdrawn.
Interest From Bonds
Interest received from taxable bonds and other fixed-income instruments may need to be included in the investor’s estimated taxable income.
The investor should distinguish between:
Coupon income
Accrued interest
Capital gains or losses on sale
Tax-exempt and taxable instruments
TDS deducted, where applicable
A higher stated yield does not represent the investor’s final return unless taxation is considered.
Unlisted and Pre-IPO Shares
The sale of unlisted shares can create a capital-gains liability. The applicable holding-period rules, valuation requirements and tax treatment may differ from listed shares.
Investors should preserve:
Purchase documents
Sale documents
Date and cost of acquisition
Demat or ownership records
Transaction charges
Valuation information, where relevant
Unlisted-share investors should not wait until the return-filing stage to reconstruct transaction details. Early documentation can help with both advance-tax estimation and accurate reporting.
Why Can Investment Income Create an Advance-Tax Shortfall?
Investment income is often uneven and less predictable than salary.
A taxpayer may experience a shortfall because:
A large capital gain occurred unexpectedly
Dividend income was higher than anticipated
Fixed-deposit interest was not fully considered
Unlisted shares were sold during the year
Rental or freelance income increased
TDS was lower than the final tax liability
Multiple investment accounts were not reviewed together
A portfolio transaction was completed near an instalment deadline
The tax impact should therefore be reviewed whenever a material investment transaction takes place—not only at the end of the tax year.
What Happens If the 15 September Deadline Was Missed?
Missing the deadline does not remove the underlying tax liability. A delayed or insufficient payment may attract interest under the applicable advance-tax provisions.
The precise interest calculation depends on factors such as:
Required instalment
Amount actually paid
Size of the shortfall
Date on which the income arose
Date on which the shortfall is paid
Nature of the income
The next advance-tax instalment is due on 15 December 2026, when cumulative payment should generally reach at least 75% of the estimated annual liability.
However, waiting until December without reviewing the September shortfall may increase the interest payable. Investors who missed the deadline should calculate the revised liability and consult a qualified tax professional instead of postponing the matter until return filing.
How Should Investors Estimate Their Liability?
Investors can begin by preparing a consolidated estimate of income expected during the entire tax year.
The review should include:
Salary, business or professional income
Capital gains already realised
Expected interest and dividend income
Rental and other taxable income
Applicable deductions, reliefs and exemptions
TDS and TCS already available
Tax already paid
Remaining estimated liability
Supporting records may include:
Broker capital-gains statements
Mutual-fund transaction statements
Bank interest certificates
Dividend statements
Form 26AS or the corresponding tax-credit statement
Annual Information Statement
Unlisted-share transaction documents
Previous advance-tax challans
Because the tax year is still ongoing, the estimate may change. Investors should update it before every instalment date and after any major transaction.
Why Should Tax Be Considered During Portfolio Evaluation?
Taxes can materially change the return an investor ultimately retains.
Consider two investments that produce the same pre-tax return. Their post-tax outcomes may differ because of:
Different tax rates
Holding periods
Nature of the income
Timing of the sale
Availability of set-offs
Transaction expenses
Investor-specific circumstances
This does not mean an investment should be selected only for its tax treatment. A tax-efficient product can still be unsuitable if it does not match the investor’s risk tolerance, liquidity needs or financial goals.
The correct sequence is:
Evaluate the investment on merit
Understand its risks and liquidity
Estimate the tax impact
Compare the post-tax outcome
Confirm its suitability within the portfolio
Tax planning should support the investment strategy—not replace it.
What Should Investors Do Before the Next Deadline?
Before 15 December 2026, investors should:
Consolidate income across all investment accounts
Record capital gains realised after the previous calculation
Review interest and dividend income
Verify the tax already deducted
Check previous advance-tax payments
Estimate income expected during the remaining year
Maintain documents for listed and unlisted investments
Consult a qualified tax adviser for complex transactions
Investors with foreign assets, unlisted shares, business income or multiple capital-gains transactions may require a more detailed review.
Ranjit Jha’s Perspective
Investors often focus on gross returns while evaluating a portfolio, but the amount ultimately available for their financial goals is the post-tax return.
Advance-tax planning becomes especially important when income comes from several sources, including capital gains, dividends, deposits, bonds and unlisted investments. Bringing these details together during the year can reduce last-minute pressure and provide a clearer understanding of the portfolio’s actual outcome.
Good portfolio planning should consider return, risk, liquidity and taxation together.
Explore More with Rurash
If investment income, capital gains or portfolio transactions have changed your financial position, Rurash Financials Pvt. Ltd. can help you review your investments from the perspective of portfolio suitability, risk, liquidity and post-tax outcomes.
For tax calculations and filing decisions, investors should consult a qualified tax professional.
Frequently Asked Questions
Is advance tax an additional tax?
No. Advance tax is the estimated annual income-tax liability paid in instalments during the tax year instead of as one large payment later.
Do salaried investors need to pay advance tax?
They may need to if TDS does not fully cover tax payable on capital gains, dividends, interest, rent or other taxable income.
Does the ₹10,000 threshold refer to income or tax?
It generally refers to the estimated tax payable after considering eligible tax credits, not the amount of investment income earned.
Are capital gains included in advance tax?
Yes. Once capital gains arise, investors should include their tax impact in the appropriate remaining advance-tax instalment, subject to the applicable rules.
Are resident senior citizens required to pay advance tax?
Resident senior citizens without income from business or profession are generally exempt. Their precise eligibility should be confirmed based on their circumstances.
What is the next advance-tax deadline?
The next instalment is due on 15 December 2026, by which eligible taxpayers should generally have paid at least 75% of their estimated annual advance-tax liability.