Advance tax for NRIs: the December 15 instalment on Indian rent and capital gains (2026)

Most NRIs never think about advance tax, because banks, buyers and brokers deduct TDS on most India income paid to non-residents. That TDS usually covers the tax. The trouble starts when it does not: a tenant who pays rent in full, a lower TDS certificate on a property sale, or interest on a private loan. This guide explains who owes advance tax, how the December 15 instalment works, and how to pay it from the US.

This is general information, not personal tax advice. The rules below are from the Income-tax Act, 2025, which applies to income earned from April 1, 2026.

What advance tax is under the new Income-tax Act

Advance tax is income tax you pay in instalments during the year the income is earned, instead of in one lump sum when you file. From April 1, 2026, it is governed by sections 403 to 408 of the Income-tax Act, 2025. The old Act's "previous year" is now called the "tax year", so the year running from April 1, 2026 to March 31, 2027 is tax year 2026-27. The return for it is filed in 2027.

The interest sections were renumbered too. What used to be section 234B (paying too little advance tax overall) is now section 424. What used to be section 234C (paying an instalment late) is now section 425. The rates did not change.

Do you owe advance tax as an NRI?

The test is one number. Estimate your total Indian tax for the year, subtract the TDS that has been or will be deducted, and if Rs 10,000 or more is left, advance tax applies. Non-residents are taxed in India only on income that arises, accrues or is received in India, so your US salary does not enter this calculation.

When TDS usually covers you

• NRO interest: banks deduct TDS at about 31.2% (30% plus cess, more with surcharge), which is usually more than your actual tax on it.
• NRE and FCNR interest: tax-free for NRIs, so nothing to pay.
• Shares and mutual funds sold through your NRI account: the broker or fund house deducts TDS on the gain.
• Property sold at the full TDS rate: the buyer deducts TDS on the sale, often far more than the tax actually owed.

When you probably owe advance tax

• Rent from an Indian flat where the tenant pays you in full. A tenant paying rent to a non-resident is supposed to deduct TDS, but many individual tenants do not.
• A property sale under a lower TDS certificate, where the certificate rate turns out lower than your final tax.
• Interest on a loan to a relative or a private company, where no one deducts TDS.
• A move back to India this year that makes you an ordinary resident, so foreign income comes into the Indian net (more on this below).

One exemption does not help NRIs. A resident senior citizen aged 60 or more with no business or professional income is not required to pay advance tax. The exemption is for residents only, so an NRI parent over 60 with untaxed Indian rent is still covered by the rules.

The four instalment dates for tax year 2026-27

Section 408 sets cumulative targets. Each date is the share of the full year's advance tax that should be paid by then:

1. June 15, 2026: at least 15%.
2. September 15, 2026: at least 45%.
3. December 15, 2026: at least 75%.
4. March 15, 2027: 100%.

Any advance tax paid by March 31, 2027 still counts as advance tax for the year. There is some slack in the first two dates: section 425 charges no interest if you paid at least 12% by June 15 and 36% by September 15. There is no such slack on December 15 or March 15.

Worked example: rent from a flat in Bengaluru

Priya lives in Seattle and rents out her Bengaluru flat for Rs 1,00,000 a month. Her tenant pays the full rent into her NRO account and deducts no TDS. She has no other Indian income apart from NRO interest that already has TDS. She uses the new tax regime, the default.

• Annual rent: Rs 12,00,000. Assume no municipal tax paid.
• Standard deduction of 30% on house property income: Rs 3,60,000. Taxable rent: Rs 8,40,000.
• Tax at new regime slab rates: nil on the first Rs 4,00,000, 5% on the next Rs 4,00,000 (Rs 20,000) and 10% on the last Rs 40,000 (Rs 4,000). Total Rs 24,000.
• Add 4% health and education cess: Rs 960. Tax for the year: Rs 24,960.

A resident with the same income would pay nothing, because the rebate that wipes out tax on income up to Rs 12 lakh is available only to residents. Priya is above the Rs 10,000 line, so advance tax applies. By December 15, 2026 she should have paid 75%, or Rs 18,720, and the remaining Rs 6,240 by March 15, 2027.

Say she only learns about this in November and has paid nothing. If she pays Rs 18,720 by December 15, she avoids interest on the December instalment. She still owes section 425 interest on the two missed instalments, at 1% a month for three months each: about Rs 111 on the June shortfall (15% of the tax) and about Rs 336 on the September shortfall (45%). That is roughly Rs 450 in total, a small price compared with skipping December too.

If her tenant had deducted TDS at 30% plus cess on the rent, the TDS would have exceeded her tax and she would owe no advance tax. Instead she would file a return to claim the excess back as a refund.

Capital gains: the rule that keeps interest away

You cannot pay June advance tax on a gain you make in October. Section 425 recognises this. A shortfall caused by capital gains, along with lottery winnings, first-time business income and dividends, is ignored for instalment interest if you pay the tax on that income in the instalments that fall due after it arises. If it arises after March 15, pay it by March 31.

Example: Rahul sells a plot in Pune in October 2026 under a lower TDS certificate. Once he works out the final numbers, his tax on the gain is Rs 3,00,000 more than the TDS deducted. The instalments left after the sale are December 15 and March 15. Paying the Rs 3,00,000 across those dates, ideally all of it on December 15, means no section 425 interest on that gain. Leaving it until he files in 2027 means interest under both section 424 and section 425.

The reverse case is more common: the buyer deducted TDS at the full rate, which is more than the tax you owe. Then there is nothing to pay in advance, and the fix is a return that claims the refund. If the money is headed to the US, plan Form 15CA and 15CB at the same time. The same refund logic applies when TDS on NRO interest is higher than the treaty rate; see our guide to claiming the India-US treaty rate on NRO interest.

If you moved back to India this year

Returning NRIs need to check their residential status before December 15. Most people who move back land as Resident but Not Ordinarily Resident for two or three years, and in those years India generally does not tax foreign income. Our guide to RNOR status for returning NRIs explains the tests.

If you do not qualify for RNOR and become an ordinary resident for tax year 2026-27, India taxes your worldwide income for the whole year. That can include US salary for the months before you moved, US interest, dividends and gains on US shares. No Indian employer is deducting TDS on that, so advance tax is likely. Work out how the foreign tax credit for US tax affects your estimate with a professional, because the credit is claimed when you file and the instalment dates do not wait.

How to pay advance tax from the US

You pay online through the income tax e-filing portal. You do not need to be in India.

1. Go to incometax.gov.in and open e-Pay Tax. You can log in with your PAN or use the option to pay without logging in.
2. Choose Income Tax, select tax year 2026-27, and choose Advance Tax (100) as the type of payment.
3. Pay through net banking from your NRO or NRE account with an authorised bank, or another mode the portal offers. Many US cards do not work on the payment gateway, so net banking is the reliable route.
4. Download the challan receipt and note the CIN (Challan Identification Number). It appears in your Form 26AS and annual information statement, and you report it in your return.

Check the tax year twice before you pay. A payment booked to the wrong year is one of the most common reasons advance tax goes missing at filing time, and fixing it takes a correction request with your bank or the department.

What if you skip advance tax altogether?

Nothing is lost permanently, but interest adds up from two directions:

• Section 425: 1% a month on each missed instalment, for three months on the June, September and December shortfalls and one month on the March shortfall.
• Section 424: if you paid less than 90% of your assessed tax by March 31, 1% a month on the shortfall from April 1, 2027 until you pay it, usually when you file the return.

File late as well and section 423 interest and a late fee follow. If you are still sorting out last year's return, our guide to filing a belated ITR as an NRI by December 31 covers that deadline.

The US side of the same income

If you are a US tax resident, the same Indian rent and gains also go on your US return. Our guide to reporting India income on your US tax return walks through where it goes. Indian income tax you pay, advance tax included, can generally be claimed as a foreign tax credit on Form 1116. Which US year the credit lands in depends on whether you claim credits on a paid or an accrued basis, so keep your challans with your US records. Interest under sections 424 and 425 is not income tax and does not count toward the credit.

If you want someone to estimate the December 15 payment and file the return that settles it, Lesser Tax offers India tax filing for NRIs, with the US side handled together.