Second Installment: Midyear Tax Check

By 15th September, half the financial year has passed. This installment requires you to have paid 45% cumulatively (including the June payment) of your estimated full-year tax.

If you did not pay the June installment (15%), you can make up for it here — but you will already owe Section 234C interest on the June shortfall (1% × 3 months × shortfall amount).

Recalibrate Your Estimate

Advance tax is based on estimated income. By September, you have 6 months of actual data for FY 2026-27:

Update your income estimate based on H1 actual revenue/profits
Revise projections for H2 (seasonal businesses: if your busy season is Q3-Q4, ensure conservative H2 estimates)
Factor in capital gains realised in April–September (equity markets, property sales, MF redemptions)

For businesses with large, lumpy income (like consultants with milestone-based billing), use June–September actuals to refine the estimate. Overpaying is better than underpaying — excess advance tax earns 6% simple interest refund, while shortfall attracts 12% annualised compound interest.

Section 234C Interest Computation

If your cumulative advance tax by 15th September is less than 45% of net tax:

Interest = (45% of net tax − cumulative paid) × 1% × 3 months

Example:

Estimated net tax for FY 2026-27: ₹8 lakh
Required by September 15: 45% = ₹3.6 lakh
Paid in June: ₹1 lakh (June was the first installment)
Shortfall: ₹3.6L − ₹1L = ₹2.6 lakh
234C Interest on September installment: 2.6L × 1% × 3 = ₹7,800

Special Situations

Capital Gains Income: For short-term and long-term capital gains, advance tax works differently — if gains accrue after the June / September installment date, they can be included in the installment following the quarter in which they arose (Section 234C proviso for "unforeseen" income). However, plan proactively if you expect large gains.

Companies: For domestic companies, corporate advance tax fractions are: 15% (June), 45% (September), 75% (December), 100% (March). The same due dates and 234C computation apply.

Action Checklist

[ ] Update FY 2026-27 income estimate based on April–September actual income
[ ] Compute revised estimated tax liability
[ ] Calculate 45% cumulative required (less June payment + any TDS already deducted)
[ ] Pay top-up via Challan 280 — by 15th September 2026
[ ] Save challan receipt
[ ] Compute and note December installment (75% cumulative due 15th December)