Advance Tax 3rd Installment 2026: The December 15 Deadline, the 75% Rule, and the Income Spikes Nobody Re-Estimates

If today's date is December 15, 2026, the third advance tax instalment for FY 2026-27 is due before the day ends — cumulatively 75% of the year's estimated tax, not a flat quarter more than September's payment. This is also the instalment where estimates drift furthest from reality, because a Diwali bonus, a jump in Q3 freelance billing, or capital gains booked between October and December rarely made it into the number estimated back in June. Our September instalment guide covers the broader mechanics and the Section 425 renumbering; this one focuses on December specifically.

The 75% Rule and What It Means in Rupees

Advance tax for FY 2026-27 is paid in four cumulative instalments: 15% of the year's estimated tax by June 15, 45% by September 15, 75% by December 15, and the full 100% by March 15. Anyone whose total tax liability for the year, after subtracting TDS and TCS already deducted, exceeds ₹10,000 owes this schedule — salaried employees are usually covered entirely by employer TDS, but rental income, capital gains, freelance fees, or high FD interest sitting alongside a salary routinely pushes someone over that threshold.

A taxpayer estimating a full-year liability of ₹3,00,000 needs ₹2,25,000 paid cumulatively by today — 75% of ₹3,00,000. If ₹1,35,000 was already paid by September 15 against the 45% target, another ₹90,000 closes the gap; if nothing at all was paid before today, the full ₹2,25,000 falls due at once, since an earlier shortfall doesn't get a separate grace period — it simply adds to what's owed at each later instalment.

Why December Catches More People Off Guard Than September

The June and September instalments are usually built on a salary and investment picture that's already settled for the year. December lands right after the festive season, when income that doesn't flow through a predictable TDS trail tends to spike without getting folded back into the original estimate:

• A Diwali bonus, variable pay, or year-end sales incentive credited in October–November, outside the salary TDS cycle the original estimate was based on
• Freelance or consulting invoices that clear faster as client budgets close out before calendar year-end
• Capital gains booked between October and December from portfolio rebalancing or a festive-season market rally — see our mutual fund capital gains guide for the slab-wise mechanics
• Crypto or other virtual digital asset gains, where the 1% TDS withheld at the exchange covers only a fraction of the flat 30% tax actually owed under Section 115BBH
• A jump in FD or savings account interest once the cumulative figure for the year crosses the TDS-exempt threshold

Section 425, Not 234C — the Short Version

The interest charged for falling short of today's 75% target is Section 425 of the Income-tax Act, 2025, not the Section 234C most taxpayers grew up with — the renumbering took effect from FY 2026-27 onward, alongside Section 234B becoming Section 424. Our September instalment guide has the full old-to-new section table if a notice or a CA's note references a number that looks unfamiliar; the underlying mechanics are unchanged — 1% simple interest per month on whatever's short.

What a December Shortfall Actually Costs

A shortfall against the June, September, or December instalments draws interest for three months on the unpaid amount, calculated from the day after the deadline passes — regardless of how soon afterward the gap gets closed. Paying the missing amount a week late doesn't reduce the three months of interest already accrued on that instalment; it only stops further interest from building on top of it. Only the final instalment, due March 15, carries a shorter one-month interest window if missed. Re-estimating the full year's income today — folding in anything that changed since September — and paying the gap immediately is what keeps this instalment's shortfall from compounding further by the March 15 deadline.