The third instalment of advance tax for FY 2025–26 is due on 15 December 2025. Taxpayers with estimated annual tax liability exceeding ₹10,000 must ensure compliance to avoid interest under Sections 234B and 234C of the Income Tax Act.
This instalment is critical, as it requires 75% of the total estimated tax liability to be paid by this date.
What Is Advance Tax?
Advance tax is income tax paid in instalments during the financial year instead of a lump sum at year-end. It applies to individuals, professionals, businesses and companies whose tax liability crosses ₹10,000 in a financial year.
The objective is to align tax payments with income generation and reduce year-end defaults.
Advance Tax Instalment Schedule (FY 2025–26)
| Due Date | Cumulative Tax Payable |
| 15 June 2025 | 15% |
| 15 September 2025 | 45% |
| 15 December 2025 | 75% |
| 15 March 2026 | 100% |
Failure to meet these thresholds may trigger interest, even if full tax is eventually paid at year-end.
Who Must Pay Advance Tax?
Advance tax applies to:
- Salaried individuals with additional income
- Freelancers and professionals
- Business owners and companies
- Investors with capital gains or interest income
Exemption:
Senior citizens aged 60 years or above are exempt only if they do not have income from business or profession.
Interest for Non-Compliance
- Section 234C:
1% per month for shortfall or delay in instalment payments. - Section 234B:
1% per month if at least 90% of total tax is not paid by year-end.
Even partial shortfalls can attract interest, making timely estimation crucial.
How to Estimate Advance Tax Liability
Taxpayers should reassess income projections before 15 December.
Step 1: Estimate total income for FY 2025–26
Include salary, business income, capital gains, interest, rental income.
Step 2: Deduct eligible deductions
Sections 80C, 80D, HRA, home loan interest, etc., as applicable under the chosen tax regime.
Step 3: Compute tax liability
Apply slab rates, surcharge and cess.
Step 4: Adjust for taxes already paid
TDS, TCS and earlier advance tax instalments.
The balance payable to reach 75% must be deposited by 15 December.
How to Pay Advance Tax Online
- Visit www.incometax.gov.in
- Click E-Pay Tax under Quick Links
- Enter PAN and verify via OTP
- Select Income Tax
- Choose Assessment Year 2026–27
- Select Advance Tax (100) as payment type
- Complete payment via net banking, UPI or debit card
- Save the challan for records
Key Client Action Points
- Review capital gains and interest income for Q3
- Re-estimate income if business or professional earnings have changed
- Ensure TDS credits are accurately reflected
- Avoid relying solely on March instalment to correct shortfalls
- Maintain challan copies for assessment and audit trails
Conclusion
The 15 December advance tax deadline is a compliance checkpoint, not a formality. Timely and accurate payment reduces interest exposure and prevents year-end tax shocks. Taxpayers with fluctuating income should reassess projections now and ensure the 75% threshold is met.