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Advance Tax Q3 for FY 2026-27: 75 Percent Cumulative by 15 December 2026

Last reviewed: May 2026 · Sourced from official government portals

01

What The Q3 Instalment Represents

Q3 cumulative target is 75 percent of estimated annual tax. By 15 December, three-quarters of your annual tax should be paid. If you've stayed on schedule (15 percent in Q1, 45 percent cumulative in Q2), Q3 means an additional 30 percent. If you skipped earlier quarters, Q3 is the practical catch-up moment, and the law allows you to clear all backlog in one shot.

02

Why Q3 Is The Catch-up Quarter

By December, nine months of the financial year are in the books and the income picture is much clearer than at Q1 or even Q2. Three patterns make Q3 the practical catch-up quarter for most taxpayers:

  • •Most retail investors realise their capital gains by November to December as part of year-end portfolio rebalancing or tax-loss harvesting.
  • •Year-end bonuses and performance payouts are typically known by Q3 even if paid later.
  • •Q4 (15 March) leaves only three months of accrual on any 425 interest, vs Q3 where you still have time before the Section 424 year-end calculation kicks in.
03

Section 425 Interest Calculation For Q3 Misses

Example. Annual tax target Rs 4,00,000. Q3 cumulative target Rs 3,00,000 (75 percent). Total paid by Q3: Rs 1,80,000 (45 percent). Q3 shortfall Rs 1,20,000. Section 425 interest at 1 percent per month for 3 months (December to March) = Rs 3,600. The Q1 and Q2 shortfalls have separately been compounding throughout the year.

04

Year-end Planning Starts Here

Q3 is also the natural moment for year-end tax planning. You know roughly what your annual income will be, what your tax exposure is, and where there's still room to act before 31 March. Common Q3 planning moves:

  • •Top up Section 80C investments (PPF, ELSS) under the old regime if applicable.
  • •Realise capital losses to offset realised gains (tax-loss harvesting).
  • •Pre-pay home loan principal under Section 80EE or Section 80EEA where eligible.
  • •Defer year-end bonuses or stock vest dates to manage slab impact (subject to employer flexibility).
  • •Make donations under Section 80G if old regime, before 31 March cut-off.

Old-regime tax planning matters less under the new regime, since most deductions don't apply there. If you're in the new regime, Q3 planning is mostly about ensuring the advance tax payment is correctly computed.

05

Income Tax Act 2025 Bridge

Same as Q1 and Q2. The new Act applies, with Section 404 (was 208), Section 424 (was 234B), and Section 425 (was 234C) governing FY 2026-27 advance tax. Substantive rules unchanged.

06

Avoiding Section 424 At Year-end

Section 424 (formerly 234B) is the bigger interest exposure than Section 425. It charges 1 percent per month or part thereof from 1 April 2027 until the date of self-assessment payment, if total advance tax paid during the year is below 90 percent of assessed annual tax. The way to avoid 424 is simple: by 15 March 2027 (Q4 date), ensure your total advance tax payment is at least 90 percent of true annual tax. Q3 is when you should run a final estimation and plan the Q4 top-up.

07

How To Pay

Same flow as earlier quarters. Income Tax e-Filing Portal, e-Pay Tax, Advance Tax (100), AY 2027-28. If you're clearing multiple quarter shortfalls in one shot, file a single challan for the total catch-up amount. The breakdown by quarter happens at ITR filing time.

FAQ

Frequently Asked Questions

Yes, paying the cumulative 75 percent (or even more) in December stops further Section 425 accrual on Q1 and Q2 shortfalls. The interest already accrued for the months Q1 and Q2 were unpaid is still owed at ITR filing time.

Yes. Once a capital gain is realised, it has to be included in the next instalment computation. Section 425 unanticipated capital gain relief works in your favour: if the gain wasn't reasonably anticipated until Q3, you can include it in Q3 without 425 interest on the unanticipated portion in earlier quarters.

Less than under the old regime, but yes. Capital loss harvesting still works under the new regime. Donation under Section 80G doesn't (no deduction in new regime). Standard deduction (Rs 75,000) is fixed and not a planning lever. The main Q3 task is just getting the advance tax estimate right.

Yes, any excess advance tax over actual liability becomes a refund at ITR filing time. The refund is processed after the ITR is filed and assessed, typically 1 to 3 months after filing for clean returns. Refunds carry Section 244A interest at 0.5 percent per month from 1 April of the AY.

15 March 2027 (Q4 date). By that date, total advance tax paid should be at least 90 percent of assessed annual tax. Falling below 90 percent triggers Section 424 from 1 April 2027 until self-assessment payment.

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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