The December 15 deadline is a key compliance milestone for taxpayers, marking the third instalment of advance tax for the financial year 2025–26 (assessment year 2026–27). Any individual whose total tax liability for the year exceeds ₹10,000, after adjusting for tax deducted at source (TDS), is required to pay tax in advance.
By December 15, taxpayers must have paid at least 75% of their total estimated tax liability for the financial year. “This instalment is critical. Missing the deadline automatically attracts interest under Section 234C of the Income-tax Act, even if the remaining tax is paid later while filing the return,” said Avnish Arora, Executive Director – Direct Tax, Forvis Mazars India.
Advance tax applies to both salaried and non-salaried taxpayers. While salaried individuals usually meet their tax obligations through monthly TDS, advance tax becomes necessary when TDS falls short due to additional income such as capital gains, interest income, rental income, freelancing receipts, bonuses, or foreign income.
For non-compliance, the law mandates interest at 1% per month for three months on the shortfall in the December instalment. Further, if total advance tax paid during the year is less than 90% of the final tax liability, additional interest under Section 234B may also be levied, significantly increasing the tax burden.
However, there is relief for certain taxpayers. Resident senior citizens aged 60 years and above who do not earn income from business or profession are fully exempt from paying advance tax.
Tax experts advise taxpayers to reassess income estimates before the deadline, account for any recent gains or one
time receipts, and make payments through the income tax e-filing portal to avoid interest costs and ensure smoother tax filing later.
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