Advance Tax on Capital Gains From a Property Sale: Due Dates and Interest
Tax on the gain from selling a flat or plot is not always payable at the time of filing the return. Where the seller's tax for the year is Rs. 10,000 or more, it is due during the year itself as advance tax. This guide explains who must pay, the four due dates, the special relief for capital gains, the interest on late payment and how a Bangalore property seller should plan the payment.
Who Must Pay Advance Tax After a Sale
Advance tax applies when the estimated tax for the year, after subtracting tax already deducted at source, is Rs. 10,000 or more. The test looks at the whole year's income, so a property gain is added to salary, business income, rent and interest. A single sale is usually enough to cross the limit.
One group is exempt. A resident aged 60 or more who has no income from business or profession is not required to pay advance tax. Such a seller pays the tax on the gain as self-assessment tax before filing the return, without interest for late advance tax.
The rules are now in sections 403 to 408 of the Income-tax Act, 2025, which applies to income earned from 1 April 2026. The limit, the dates and the percentages are the same as under the 1961 Act. Only the section numbers have changed.
How the Tax on the Gain Is Estimated
The seller first works out the taxable gain and then the tax on it. A property held for more than 24 months gives a long-term gain, taxed at 12.5% without indexation. A resident individual or HUF who acquired the property before 23 July 2024 may instead pay 20% on the indexed gain where that is lower. A property held for 24 months or less gives a short-term gain, taxed at the seller's slab rate.
Three items reduce the amount payable as advance tax.
- Exemptions the seller plans to claim by buying or building a house, or by investing in specified bonds
- The 1% tax the buyer deducts at source when the sale price is Rs. 50 Lakhs or more
- Tax already deducted from salary or other income
Health and education cess of 4% is added to the tax, and a surcharge applies at higher income levels. A seller who plans a reinvestment may leave the exempt part out of the estimate. If the reinvestment does not happen, the tax on that part becomes due with interest.
The Four Due Dates
Advance tax is paid in four instalments, each measured as a cumulative share of the year's tax. The schedule for the tax year 2026-27 is given below.
| Due date | Cumulative share of the year's tax |
|---|---|
| 15 June 2026 | 15% |
| 15 September 2026 | 45% |
| 15 December 2026 | 75% |
| 15 March 2027 | 100% |
Any amount paid up to 31 March counts as advance tax for the year. Tax paid after that date is self-assessment tax and carries interest.
The Relief for Capital Gains
A sale date is rarely known at the start of the year, so the law does not expect a seller to have paid tax on a gain before it arises. Section 425 of the 2025 Act (section 234C of the 1961 Act) waives interest on the earlier instalments for a shortfall caused by a capital gain. The condition is that the tax on the gain is paid in full within the remaining instalments of the year, or by 31 March if none remains.
In practice, the simplest course is to pay the whole tax on the gain by the next due date after the sale. The table shows how this works for each sale period.
| Sale registered | Pay the tax on the gain by |
|---|---|
| 1 April to 15 June | 15 June, and no later than 15 March |
| 16 June to 15 September | 15 September, and no later than 15 March |
| 16 September to 15 December | 15 December, and no later than 15 March |
| 16 December to 15 March | 15 March |
| 16 March to 31 March | 31 March |
The gain arises on the date of transfer, which for most sales is the date the sale deed is registered. An advance received under a sale agreement does not create the gain by itself.
Interest on Late or Short Payment
Two interest charges apply, both at 1% simple interest for each month or part of a month. They are worked out separately and added together.
Interest for deferring an instalment
Section 425 charges interest when an instalment falls short of its cumulative share. A shortfall on 15 June, 15 September or 15 December carries interest for three months, and a shortfall on 15 March for one month. Payment of 12% by June and 36% by September is treated as sufficient for those two dates.
Interest for not paying by the end of the year
Section 424 (section 234B earlier) applies when the advance tax paid by 31 March is less than 90% of the tax for the year. Interest then runs on the unpaid amount from 1 April until the date of payment.
A Worked Example
A salaried owner registers the sale of a flat on 10 October 2026 for Rs. 1.5 Crore, and the long-term gain after exemptions is Rs. 30 Lakhs. Tax at 12.5% is Rs. 3.75 Lakhs, and with 4% cess it comes to Rs. 3.90 Lakhs. The buyer has deducted 1% of the price, Rs. 1.5 Lakhs, so the balance is Rs. 2.40 Lakhs.
Paying Rs. 2.40 Lakhs by 15 December 2026 settles the matter with no interest. Suppose the seller waits and pays it with the return in July 2027. Interest for deferment is Rs. 5,400 on the December shortfall and Rs. 2,400 on the March shortfall. Interest from April to July adds Rs. 9,600, which takes the total to about Rs. 17,400.
How to Pay
Advance tax is paid online through the e-Pay Tax service on the income tax e-filing portal. The seller selects advance tax as the type of payment and the correct tax year, pays by net banking, card or UPI, and saves the challan receipt. The payment appears in the annual information statement within a few days.
A non-resident seller is in a different position, since the buyer deducts tax on the gain at source at higher rates. That deduction often covers the whole liability, and advance tax arises only on any balance. Our NRI services team helps overseas owners plan the sale and the tax paperwork.
Checklist for Sellers
These steps keep the payment on time once a sale is agreed.
- Estimate the gain before fixing the registration date
- Decide on reinvestment and reduce the estimate only by exemptions that will really be used
- Subtract the 1% tax the buyer will deduct and check it in the annual tax statement after the sale
- Mark the next advance tax date after registration and pay the balance by then
- Keep the challan, the sale deed and the reinvestment papers for the return
- Deposit unused gain in a Capital Gains Account Scheme account before the return due date where an exemption is still planned
A chartered accountant should confirm the figures for a large gain, a jointly owned property or a sale by a non-resident. The cost of that advice is small next to interest on a late payment.