Advance Tax 2nd Installment 2026: The September 15 Deadline, the 45% Rule, and Why the Penalty Section Just Changed

If today's date is September 15, 2026, the second advance tax instalment for FY 2026-27 is due before the day is out — cumulatively 45% of the full year's estimated tax, not 45% of one quarter. Our broader advance tax guide covers who owes it and the most commonly missed situations; this one focuses specifically on today's instalment, how to work out what's actually due, and a numbering change that applies to every rupee of interest charged this year onward.

The September 15 Deadline and the 45% Rule

Advance tax for FY 2026-27 is paid in four instalments, each measured as a cumulative percentage of the full year's estimated tax liability — not as four equal quarterly slices. By June 15, at least 15% of the estimated tax must be paid; by September 15, that cumulative figure rises to 45%; by December 15, to 75%; and by March 15, the full 100%. Anyone whose total tax liability for the year, after subtracting TDS and TCS already deducted, exceeds ₹10,000 is required to pay on this schedule — salaried employees are usually covered entirely by employer TDS and can skip it, but the moment rental income, capital gains, freelance fees, high FD interest, or trading profits sit alongside a salary, that ₹10,000 threshold gets crossed quickly.

Working Out What's Actually Due Today

The 45% figure applies to the whole year's estimated tax, calculated after TDS and TCS, and it's cumulative — meaning any shortfall from the June instalment carries forward into today's payment. Someone who estimates a full-year tax liability of ₹2,00,000, after accounting for tax already deducted at source, needs ₹90,000 paid by today (45% of ₹2,00,000). If ₹30,000 was already paid by June 15 against a 15% target of ₹30,000, exactly ₹60,000 more is due now to reach the cumulative 45%. Anyone who paid nothing in June needs the full ₹90,000 today, since the June shortfall doesn't get a separate grace period — it simply increases what's owed at each later instalment.

Payment is made online through the Income Tax Department's e-filing portal using Challan No. 280, selecting 'Advance Tax' as the payment type for the correct assessment year — AY 2027-28 for income earned in FY 2026-27. A common mistake is selecting 'Self-Assessment Tax' by accident, which doesn't count as advance tax and can trigger interest even though the money has technically already been paid.

Section 425 Replaces Section 234C — What Changed This Year

The Income-tax Act, 2025 replaced the Income-tax Act, 1961 with effect from FY 2026-27, and along with it, several long-familiar section numbers changed. The interest charged for deferring or underpaying an advance tax instalment — universally known as Section 234C for decades — is now Section 425. Section 234B, the interest charged when total advance tax paid falls short of 90% of the final assessed tax, is now Section 424. Section 234A, the interest for late filing of the return itself, is now Section 423. The underlying mechanics haven't changed: interest still accrues at 1% per month (or part of a month) on the shortfall amount, whether that shortfall is against an individual instalment (Section 425) or against the 90% threshold measured after March 31 (Section 424). Filings and challans for FY 2025-26 (AY 2026-27) still reference the old 234A/234B/234C numbering; only FY 2026-27 onward uses 423/424/425.

What to Do If Today's Deadline Slips

Missing the September 15 date isn't a reason to wait until the next one — paying the shortfall as soon as possible, even a few days late, stops the Section 425 interest clock from running longer than it has to on that portion. The most common triggers people underestimate mid-year are a jump in FD interest crossing the TDS-exempt buffer, mutual fund capital gains booked over the summer, or freelance income that ramped up faster than the original estimate. Re-estimating the full year's liability today — including anything unexpected since June — and paying the gap immediately keeps the December and March instalments from compounding an error that's easy to fix now.

The mechanics haven't moved: 45% cumulative by today, 1% a month on whatever's short. What has moved is the label on the interest section itself — Section 425 going forward, not 234C — worth knowing if a notice, a CA's note, or next year's ITR utility references the new numbering and it looks unfamiliar. The next instalment — 75% cumulative — falls due December 15; our third instalment guide covers why that one trips up more taxpayers than this one does, between Diwali bonuses and year-end capital gains.