Third Installment: Final Estimate Before Year-End

By December 15th, nine months of FY 2026-27 have passed. The December installment is critical because:

You now have 75% of the year's actual income data — estimates should be highly accurate
The final installment (March) leaves little room to correct — any shortfall there carries 234C interest for 1 month
December is when year-end tax planning begins — NPS contributions, ELSS investments, donation receipts

Year-End Tax Planning Window

The period between December 15th and March 31st is your window for tax planning investments. Actions that reduce your estimated annual tax (and therefore your future advance tax requirement):

| Planning Action | Benefit | |---|---| | ELSS mutual fund investment | 80C deduction (up to ₹1.5L if old regime) | | PPF contribution | 80C deduction (5-year commitment) | | NPS contribution to Tier 1 | 80CCD(1B) additional ₹50,000 over 80C limit | | Mediclaim premium payment | 80D deduction | | Donation to NGOs | 80G deduction (50% or 100% depending on fund) |

If your estimated tax after December 15th payment is ₹10 lakh and you plan to invest ₹1.5 lakh in 80C instruments by March — account for the ₹45,000 tax saving in your December installment calculation. You can reduce December payment accordingly.

Computing December Installment

Formula:

Revised estimate of net tax liability for full FY 2026-27
Deduct planned investments (if using old regime) to arrive at reduced estimate
Required cumulative by Dec 15 = 75% of new estimate
Less: Amount already paid (June + September installments)
Less: TDS already deducted on salary/income (April–November)
= December payment required

Example:

Revised estimated tax: ₹10 lakh
75% required: ₹7.5 lakh
Paid in June: ₹1.2 lakh
Paid in September: ₹3.3 lakh
TDS deducted by employer (Apr–Nov): ₹1.5 lakh
December payment required: 7.5L − 1.2L − 3.3L − 1.5L = ₹1.5 lakh

For Businesses with Year-End Revenues

Many businesses (construction, real estate, project contracting) have significant December revenues. If your Q3 (October–December) is your highest-earning quarter, ensure December advance tax reflects this surge.

Underpaying in December — and then scrambling to cover in March — is the leading cause of Section 234C notices for businesses.

Action Checklist

[ ] Compile October and November actual income data
[ ] Prepare updated FY 2026-27 income estimate (9 months actual + 3 months projection)
[ ] Factor in planned year-end investments (80C, NPS, donations) if using old regime
[ ] Compute 75% cumulative requirement; subtract June + September payments + YTD TDS
[ ] Pay balance via Challan 280 — by 15th December 2026
[ ] Save challan receipt
[ ] Begin planning March installment (100% due by 15th March 2027)