December 15 Advance Tax Deadline: Who Must Pay the 3rd Instalment for FY26?

The deadline for the third advance tax instalment for FY 2025–26 is fast approaching. Taxpayers must ensure that 75% of their total annual tax liability is paid by December 15, failing which they may incur interest and penalties under the Income Tax Act, 1961.

Advance tax ensures that tax is collected periodically rather than during return filing. Individuals, professionals, and businesses with a tax liability of ₹10,000 or more (after TDS) are required to pay advance tax in four instalments:

• June 15: 15%

• September 15: 45%

• December 15: 75%

• March 15: 100% of total liability

Who Must Pay Advance Tax?

The rule applies not only to large companies but also to:

• Salaried individuals earning additional income such as rent, interest, freelancing income, or capital gains.

• Self-employed professionals including doctors, lawyers, consultants, and CAs.

• Small business owners and traders.

• Investors earning taxable gains from stocks, mutual funds, derivatives, crypto, or debt instruments.

Many salaried taxpayers assume TDS covers all liabilities, but any income beyond salary must be self-declared, and advance tax must be paid if it crosses the ₹10,000 threshold.

Who Is Exempt?

Advance tax is not required if:

• Remaining tax liability after TDS is less than ₹10,000.

• The taxpayer is a resident senior citizen (60+ years) with no business or professional income.

• All income is fully covered by TDS and there are no additional taxable earnings.

How to Calculate and Pay

To compute advance tax, taxpayers should estimate their FY26 income, subtract eligible deductions, apply the correct tax slab, and adjust for TDS already deducted. If the payable amount exceeds ₹10,000, advance tax becomes mandatory.

Payment can be made easily through Challan 280 on the income tax portal.

Penalties for Missing the Deadline

Failing to pay or underpaying by December 15 triggers interest under:

• Section 234B — for shortfall in tax payment

• Section 234C — for delayed instalments

These penalties can significantly increase overall tax liability, especially for those with variable income such as freelancers and traders.

Timely advance tax payments help individuals manage finances better, avoid last-minute burdens, and prevent unnecessary interest charges.