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Advance Tax Q2 for FY 2026-27: 45 Percent Cumulative by 15 September 2026

Last reviewed: May 2026 · Sourced from official government portals

01

What The Q2 Instalment Represents

The Q2 cumulative target is 45 percent of estimated annual tax. Note this is cumulative, not incremental: by 15 September, your total advance tax payment for FY 2026-27 (Q1 + Q2 combined) should reach 45 percent of annual tax. If you paid 15 percent in Q1, you owe an additional 30 percent in Q2. If you skipped Q1, you owe the full 45 percent in Q2 (plus Section 425 interest on the Q1 shortfall).

02

Why Q2 Is When Most Freelancers First Feel Advance Tax

Q1 is in June, when most freelancers and small business owners are still ramping up income for the year and haven't built a clear forecast. By September, six months of revenue is in the books, and the annual income picture starts to clarify. This is when many file their first advance tax payment of the year, often catching up on Q1 in the same shot. The downside: 3 months of Section 425 interest on the Q1 shortfall is already locked in.

03

The Cumulative Schedule Recap

Cumulative is the operative word. Each quarter's target is the running total, not a fresh slice.

QuarterDue Date FY 2026-27Cumulative TargetIf You Skipped Earlier Quarters
Q115 June 202615%N/A
Q215 September 202645%Pay full 45% + 425 interest on Q1 shortfall
Q315 December 202675%Pay full 75% + accumulated 425 interest
Q415 March 2027100%Pay full 100% + accumulated 425 interest
04

Section 425 Interest Calculation For Q2 Misses

Example. Annual tax target Rs 2,00,000. Q1 target Rs 30,000 (15 percent). You paid Rs 18,000 in Q1, shortfall Rs 12,000. Q2 cumulative target Rs 90,000 (45 percent). You paid Rs 50,000 cumulatively by Q2, shortfall Rs 40,000. Interest under Section 425: on the Q1 shortfall (Rs 12,000 for 3 months at 1 percent) Rs 360, plus on the Q2 shortfall (Rs 40,000 for 3 months at 1 percent) Rs 1,200. Total Section 425 interest by 15 December: Rs 1,560. The interest will keep accruing until the shortfalls are cleared.

05

Income Tax Act 2025 Bridge

FY 2026-27 advance tax is governed by the Income Tax Act 2025, which came into force on 1 April 2026. Section 404 replaces Section 208 (liability), Section 424 replaces 234B (annual underpayment interest), and Section 425 replaces 234C (deferment interest). Substantive rules including 1 percent monthly rate, 90 percent threshold, and the 15/45/75/100 schedule are unchanged.

06

Reforecasting In Q2

Q2 is the right time to refresh your annual income estimate. Six months of actual data is in the books, and forecasts can be tightened materially. Common Q2 reforecast triggers:

  • •Quarterly client billings clearer than April projections.
  • •Bonuses or stock vests received in May to August now confirmed.
  • •Capital gains from equity or property realised in the first half of the year.
  • •Updated salary projections for the second half of the year.
  • •Loss of expected income (lost a major client, deal collapsed).
07

How To Pay

Same flow as Q1. Income Tax e-Filing Portal, e-Pay Tax, Advance Tax (100), AY 2027-28, current FY 2026-27. Save the challan acknowledgement (BSR code, challan serial number, date). The payment will reflect in your 26AS within 3 to 5 working days.

FAQ

Frequently Asked Questions

1 percent per month or part thereof on the Q1 shortfall, for 3 months (June to September). Example: Q1 target Rs 15,000, paid Rs 0, shortfall Rs 15,000, interest Rs 450 by 15 September. The interest stops accruing once you pay the shortfall (or close it via the Q2 cumulative payment).

Cumulative 45 percent of annual tax is the right computation. If you paid 15 percent in Q1, the additional Q2 payment is 30 percent. If you skipped Q1, you pay the full 45 percent in Q2 (plus interest on Q1 default).

Not unless you've already realised it by 15 September. If the gain is reasonably unanticipated as of Q2, you can include it in Q3 instead with relief from Section 425 interest under the unanticipated capital gain rule, provided you pay by year-end.

No. Presumptive scheme filers are exempt from the quarterly schedule. Pay 100 percent in a single instalment by 15 March 2027. Q1, Q2, and Q3 don't apply to you.

Possible but risky. Underpaying causes 425 interest to keep accruing on the shortfall. Overpaying ties up cash you'll only get back as a refund after filing your ITR (and waiting for processing). A 30-minute reforecast is usually worth it.

How we reviewed this page

The penalty amounts, deadlines, and regulatory requirements on this page are sourced directly from official government portals. We do not use secondary sources. When regulations change, we update the page.

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