Income Tax

By 15 December, three-quarters of your tax should already be paid — re-estimate before you pay

The 15 December advance-tax instalment is the last one with a real chance to correct the year — and the first one where the 12% and 36% safety margins no longer help you.

By CA Ankit Shah · B.Com., F.C.A., DISA(ICAI) 9 November 2026·6 min read·ગુજરાતીમાં વાંચો

In this article

What is due by 15 December 2026 How to re-estimate your tax before 15 December Section 425 interest: why December has no cushion A worked example with the numbers What to do before 15 December Key takeaways

In brief

By 15 December 2026 you must have paid, cumulatively, 75% of your estimated tax for Tax Year 2026-27 (after TDS/TCS). The schedule is unchanged: 15% / 45% / 75% / 100%.
Interest for a miss is 1% a month for 3 months (3%) on the shortfall under Section 425 of the Income-tax Act, 2025 (old 234C). The 12% and 36% tolerance applies only to the June and September steps — not December.
Re-estimate now: if sales, a capital gain or a one-off receipt has changed the year, the 75% is of the new figure, not your April guess.
Worked example (₹4,00,000 tax): staying on schedule costs ₹0, stalling at September costs ₹3,600, paying nothing until March costs ₹16,200.

Same tax, three habits. The difference is interest on money that was always going to be paid.

A Ring Road trading firm closes October with sales running 30% ahead of what the owner pencilled in during April. The June and September advance-tax payments were made on the April estimate, on time, and nobody has looked at the number since. On 15 December the third instalment falls due — and unlike the first two, this one has no safety margin. If the estimate is stale, this is the date on which it starts to cost money.

Under the Income-tax Act, 2025, which replaced the 1961 Act from 1 April 2026, advance tax for Tax Year 2026-27 (the old FY 2026-27) still runs on the same cumulative ladder. We explained who pays and how the ladder works in our 15 September article; this one is about the next rung and what to do before climbing it.

What is due by 15 December 2026

Sections 403 to 405 of the Act (old Sections 207 to 209) require anyone whose net tax, after TDS and TCS, is ₹10,000 or more to pay advance tax in instalments. The third instalment brings the cumulative total to 75% of the year's estimated tax. In plain terms: not "75% again", but 75% of the whole year's tax, counting everything already paid.

Example: a Surat embroidery unit estimated ₹4,00,000 of tax for the year. By 15 December its total paid so far must be ₹3,00,000. If it paid ₹60,000 in June and ₹1,20,000 more in September (₹1,80,000 in all), it owes ₹1,20,000 on 15 December, not ₹3,00,000.

How to re-estimate your tax before 15 December

The law asks for your current estimate of the year's income, not the one you made in April. By mid-November you have seven months of books, so the estimate can be made on facts rather than hope. A short working: take the profit for April–October from your books, project the remaining months using last year's seasonal pattern (festival-quarter sales matter for textile and diamond units), add any other income (interest, rent, capital gains), deduct what the Act allows, compute the tax with cess, and subtract TDS/TCS already credited in Form 26AS.

Example: the trading firm above April-estimated a profit of ₹14 lakh; the books now point to about ₹18 lakh. The estimated tax moves from ₹4,00,000 to roughly ₹5,20,000, so the 75% target moves from ₹3,00,000 to ₹3,90,000. Paying against the old figure leaves a ₹90,000 shortfall on the date.

Not sure how much your cumulative 75% figure should be after this year's sales changed?

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Section 425 interest: why December has no cushion

Section 425 (old 234C) charges 1% a month, for three months, on the shortfall at each of the June, September and December steps, and 1% for one month on a March shortfall. It gives a tolerance only for the early steps: no interest if at least 12% was paid by 15 June or 36% by 15 September, even though the targets are 15% and 45%. There is no such allowance for 15 December. Miss 75% by even a little, and the interest runs on the whole gap.

There is one relief for income you could not have foreseen. As under the old law, a shortfall caused by a capital gain or winnings-type income that arose after the due date carries no Section 425 interest, provided the tax on it is paid in the remaining instalments (or by 31 March). Check the section text for your case; the relief is conditional.

Separately, Section 424 (old 234B) looks at the whole year: if advance tax paid is less than 90% of the tax finally assessed, 1% a month runs from 1 April on the shortfall until it is paid. That is why a stale estimate hurts twice if the year ran well ahead of plan.

The first two steps forgive a small miss; the third does not.

A worked example with the numbers

Take an estimated tax of ₹4,00,000 for the year and three habits. The targets are ₹60,000 (15 June), ₹1,80,000 (15 September), ₹3,00,000 (15 December).

On schedule: all targets met, nothing is charged.
Stalls after September: pays ₹1,80,000 by September, nothing in December, the balance by 15 March. The December shortfall is ₹1,20,000; at 1% for 3 months that is ₹3,600.
Nothing till March: pays the full ₹4,00,000 on 15 March. Shortfalls of ₹60,000 (June), ₹1,80,000 (September) and ₹3,00,000 (December) at 3% each give ₹1,800 + ₹5,400 + ₹9,000 = ₹16,200. Nothing paid by June means the 12% tolerance gives no help.

These are the Section 425 amounts only, on the assumption that the year's tax is exactly as estimated. A diamond workshop that under-estimates the year will also meet Section 424 if its payments fall below 90% of the final tax.

The 15 December instalment is not a payment date. It is the last date on which your estimate can still be fixed cheaply.

What to do before 15 December

A practical order for a business owner: bring the books up to October, compute the tax on the new projection, check the TDS/TCS credits in Form 26AS, set the 75% target, and pay the difference by the due date through the e-Pay Tax facility on the income-tax portal. Keep the challan; the interest calculation in your return is built from the dates on it.

Example: a Katargam textile processor who pays on 20 December rather than 15 December is already late for the third step: part of a month counts as a full month, and the 3 months' interest applies on the shortfall as it stood on 15 December.

Taxpayers who genuinely come under the presumptive scheme (Section 44AD or 44ADA) pay once, by 15 March, and have no December step. This holds only where the scheme truly applies.

Books show a very different year from April's estimate? Call before 15 December and we can recompute the figure with you.

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Key takeaways

15 December 2026: cumulative 75% of the year's estimated tax; pay only the balance over what you already paid.
Re-estimate on current books first. A stale April figure is the usual reason for a shortfall.
Section 425 interest is 1% a month for 3 months on the shortfall; the 12% / 36% tolerance does not apply in December.
Section 424 separately applies if total advance tax is under 90% of the tax finally assessed.

Sources

Press Information Bureau, Government of India, "The Income Tax Act, 2025 to come into effect from 1st April, 2026".
Income Tax Department, Section 425 — Interest for deferment of advance tax, Income-tax Act, 2025.
Income Tax Department, Due dates for payment of advance tax.

This article is general information, not professional advice. Rules change; verify current provisions or contact the office for advice on your situation.