Missed 15 September 2026 Advance Tax? Section 234C Interest Explained
The second advance tax instalment for FY 2025-26 was due on 15 September 2026, requiring 45% of your estimated annual tax paid cumulatively. If you fell short, Section 234C interest applies — here is how it is calculated and what to do now.
CA Harun Raaj
Chartered Accountant · Harun Raaj & Associates
Legal basis: Section 234C, Income Tax Act, 1961 (read with Section 207 and Section 211) — Effective: ongoing. Source: https://www.incometaxindia.gov.in/pages/acts/income-tax-act.aspx. Last reviewed by CA Harun Raaj: September 2026.
The second instalment of advance tax for FY 2025-26 fell due on 15 September 2026. By that date, every taxpayer with an estimated advance tax liability exceeding ₹10,000 was required to have paid a cumulative 45% of their estimated annual tax liability. If you missed the deadline or paid less than the required amount, Section 234C interest now applies to the shortfall — and it will show up automatically when you file your ITR.
Key point: Falling short of the 45% cumulative advance tax threshold by 15 September attracts Section 234C interest at 1% per month for three months on the shortfall amount.
Who Must Pay Advance Tax?
Under Section 207 of the Income Tax Act, 1961, advance tax is mandatory when your estimated tax liability for the year (after TDS and TCS credit) exceeds ₹10,000.
Exempt categories:
- Resident senior citizens (60+ years) with no income from business or profession — fully exempt under Section 207(2).
- Presumptive taxpayers under Section 44AD or 44ADA — may pay 100% of advance tax by 15 March; the quarterly instalment schedule does not apply to them.
Who Pays What, and When
The Full Instalment Schedule (Section 211)
Interest for Short-Payment: Section 234C
If you paid less than 45% by 15 September 2026, Section 234C interest applies to the shortfall:
- Rate: 1% per month (simple interest).
- Duration: 3 months, for the September shortfall.
- Total exposure: 3% of the shortfall amount.
This interest is added to your final tax liability when you file your ITR. The e-filing utility computes it automatically based on your advance tax payment dates and amounts, so you do not need to calculate it manually before filing — but knowing the exposure now helps you decide how much to top up before the December instalment.
Exception (proviso to Section 234C): No interest is charged on a shortfall attributable to capital gains (Section 45), casual income (such as lottery winnings), or income from a business that first arises after the due date — provided the entire tax on such income is paid in the next instalment or by 31 March.
Illustrative Example
Priya is a Delhi-based architect with professional income. Her estimated total tax for FY 2025-26 is ₹6,00,000. She paid ₹90,000 by 15 June (15%) but only ₹1,00,000 more by 15 September — a cumulative of ₹1,90,000, which is less than the required 45% (₹2,70,000).
Shortfall = ₹2,70,000 minus ₹1,90,000 = ₹80,000
Section 234C interest = 1% x ₹80,000 x 3 months = ₹2,400
This ₹2,400 will be added to her tax payable when she files her ITR-3 by 31 October 2026.
What Should You Do Right Now?
- Estimate your full-year tax liability — use your income, deductions, and applicable tax regime to arrive at a realistic figure.
- Pay the balance now using Challan 280 — select "Advance Tax" (code 100) on incometax.gov.in or tin.nsdl.com. Paying now limits your September exposure and reduces the December shortfall.
- Check your TDS credits — if your employer or payer has deducted TDS, that counts toward advance tax. Verify via Form 26AS or AIS on the e-filing portal.
- Keep payment receipts — you will need the Challan Identification Number (CIN) when filing the ITR.
- Get professional input on the calculation if you have variable income, capital gains, or foreign income, since these affect how shortfalls and interest are computed under Section 234C and its proviso.
This article is for educational purposes and reflects the provisions of the Income Tax Act, 1961 as summarised above; it is not a substitute for advice on your specific facts.
I'm CA Harun Raaj, Visakhapatnam. If you have missed the 15 September instalment or want help estimating your December and March advance tax position, reach out and we'll work through the numbers with you.
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See Also
Frequently Asked Questions
What happens if I missed the 15 September 2026 advance tax deadline?
If your cumulative advance tax payment fell short of the 45% required under the Section 211 schedule, Section 234C interest applies at 1% per month for 3 months on the shortfall amount. This is computed automatically by the e-filing utility when you file your ITR.
Does missing the September instalment affect my December advance tax instalment?
The two are computed independently. The September shortfall attracts its own 234C interest for 3 months, and the 75% cumulative threshold due on 15 December 2026 is assessed separately. Paying as much as possible now reduces the gap at the December checkpoint.
TDS has been deducted from my salary — do I also need to pay advance tax?
Only if your total estimated tax liability, after TDS credit, exceeds ₹10,000 as per Section 207. If you have additional income such as interest, rent, or capital gains not covered by salary TDS, advance tax is due on that excess.
Is Section 234C interest deductible as a business expense?
No. Interest paid under Sections 234A, 234B, and 234C is not deductible from income under the Income Tax Act, 1961.
I am a 70-year-old senior citizen with pension and FD interest — do I need to pay advance tax?
If your income is only from pension and fixed deposits with no business or professional income, you are exempt from advance tax under Section 207(2). Banks may still deduct TDS on your FD interest separately.
Are presumptive taxpayers under Section 44AD or 44ADA required to follow the quarterly instalment schedule?
No. Presumptive taxpayers under Section 44AD or 44ADA may pay 100% of their advance tax by 15 March, and the quarterly 15%/45%/75% instalment schedule under Section 211 does not apply to them.
Is there any exception where no Section 234C interest is charged despite a shortfall?
Yes. The proviso to Section 234C exempts shortfalls attributable to capital gains under Section 45, casual income like lottery winnings, or business income first arising after the due date, provided the full tax on that income is paid in the next instalment or by 31 March.
How do I pay the balance advance tax now if I missed the September deadline?
Use Challan 280 on incometax.gov.in or tin.nsdl.com, selecting 'Advance Tax' (code 100). Keep the Challan Identification Number (CIN) safe, as it is needed when filing your ITR.
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