New Delhi: If you missed the December 15 deadline for paying the third instalment of advance tax for the financial year 2025–26, you’re not alone. Many taxpayers tend to overlook this date amid year-end commitments. The good news is that a delayed payment doesn’t mean trouble right away. However, it can attract interest under income tax rules. Here’s what you need to know about the interest cost and how it may impact you.
You May Have To Pay Interest
Missing the advance tax deadline does not lead to a direct penalty under the Income Tax Act. However, taxpayers are required to pay interest if there is a delay or if the amount paid is less than what was due. According to tax experts, this interest is charged under Section 234C of the Income Tax Act, 1961, when the advance tax instalment is not paid on or before the specified due date.
How much interest will you actually pay?
If you miss the December 15 advance tax deadline, interest is charged at 1 per cent per month. This interest is calculated for three months on the shortfall, as taxpayers are expected to have paid at least 75 per cent of their total advance tax liability by December.
It’s important to note that the interest is applied only to the unpaid portion of the tax—not the entire tax liability. This means if you have already paid a part of your advance tax earlier in the year, the actual interest burden will be much lower than you might expect.
Missed December? Here’s what you can do next
If you couldn’t pay the December advance tax instalment, you still have time to limit the impact. Taxpayers can clear the remaining advance tax amount by March 15. If the total advance tax paid by then meets the required limit, the cost is mostly restricted to interest on the delayed December portion.
That said, taxpayers should be mindful of the year-end rule. Under Section 234B, if less than 90 per cent of the total tax liability is paid by March 31, additional interest at 1 per cent per month is charged on the outstanding amount from April 1 onwards, until the dues are fully cleared.
Next steps to minimise your tax burden
If you’ve missed the December advance tax deadline, the smartest move is to pay the pending amount before March 15. Clearing your dues early can significantly reduce the interest you may have to pay.
Although there is no direct penalty, interest charges can add up if delays continue. Staying mindful of advance tax deadlines and making timely payments can help you avoid extra costs and keep your tax planning on track.
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