The second advance tax instalment due on 15 September 2026 is one of the most important compliance milestones of the financial year. Under the Income-tax Act, 2025, taxpayers liable to pay advance tax are generally required to ensure that at least 45% of their total estimated tax liability for Tax Year 2026-27 has been discharged by this date.
Advance tax is often treated as a routine compliance exercise, but it is actually an opportunity to review the financial performance of a business and avoid unnecessary interest costs later in the year. Every taxpayer whose estimated tax liability exceeds ₹10,000 after considering available TDS and TCS credits is generally required to pay advance tax. This includes proprietorship businesses, partnership firms, LLPs, companies, professionals, consultants, freelancers and individuals earning substantial non-salary income. Resident senior citizens who do not have income from business or profession are generally exempt from advance tax requirements.
One of the most common mistakes businesses make is relying on projections prepared at the beginning of the financial year. By September, nearly half the year has already passed and actual financial results provide a much clearer picture than estimates prepared in April. Businesses should revisit their revenue, profit margins, operating expenses, financing costs, capital expenditure, depreciation claims, deductions and available tax credits before calculating the September instalment.
For most taxpayers, cumulative advance tax paid by 15 September should amount to at least 45% of the total estimated tax liability for the year. Any advance tax already paid in June can be adjusted against this requirement. For example, if the estimated annual tax liability is ₹10,00,000, the cumulative payment required by 15 September would be ₹4,50,000. If ₹1,50,000 was already paid in June, the balance payable by 15 September would be ₹3,00,000.
A significant risk arises when taxpayers underestimate their liability and only discover the shortfall while filing their return. The Income-tax Act continues to impose interest for deferment or short payment of advance tax. A simple review of the year's financial performance in September can often prevent avoidable interest costs and compliance issues later.
Taxpayers opting for presumptive taxation generally have a simpler compliance requirement and may discharge their advance tax liability in a single instalment by 15 March rather than following the quarterly payment schedule applicable to most taxpayers.
September is also an ideal time to review broader tax planning opportunities. Businesses may evaluate additional depreciation claims, capital expenditure timing, restructuring decisions, remuneration and dividend strategies, foreign income disclosures and tax-efficient investment planning. Decisions taken at this stage of the year often have a meaningful impact on the overall tax position before year-end.
Advance tax should not be viewed merely as another payment deadline. It is an opportunity to assess profitability, review compliance, identify tax-saving opportunities and minimise future interest exposure. With the second instalment due on 15 September 2026, businesses and professionals should use this period to revisit their tax projections and ensure that their compliance position remains firmly on track for the remainder of the year.