Advance Tax on US Stock Gains: Pay by 15 December

Sold some US shares this year, or vested RSUs and sold them for cash? Your employer's TDS covers your salary, but nobody deducts tax on a gain you make in a US brokerage account. If the extra tax for the year is ₹10,000 or more, you are expected to pay it yourself as advance tax. The next instalment is due on 15 December 2026.

Here is how it works for tax year 2026-27 (April 2026 to March 2027), the first year under the Income-tax Act, 2025.

Key points

• Advance tax applies when the tax you still owe for the year, after TDS and TCS, is ₹10,000 or more (sections 404 and 405 of the Income-tax Act, 2025).
• Due dates for individuals: 15 June (15%), 15 September (45%), 15 December (75%) and 15 March (100%), each cumulative (section 408).
• Capital gains and dividends get relief: if you could not estimate them earlier, there is no deferment interest as long as you pay the tax on them in the remaining instalments, or by 31 March if none are left (section 425(4)).
• Skip it entirely and two interest charges apply: deferment interest under section 425 (the old 234C) and 1% a month under section 424 (the old 234B) if you paid less than 90% of your tax by 31 March.
• TDS and TCS reduce what you owe. TCS collected by your bank on LRS remittances counts too.
• Practical habit: when you sell US shares, pay the tax on that gain by the next 15th of June, September, December or March.

Why US stock investors get caught out

TDS on salary usually covers everything. US investments break that in three ways:

1. No TDS on gains. A US broker does not deduct Indian tax when you sell. The full STCG or LTCG tax is yours to pay. 2. US dividends are under-taxed at source. The US withholds 25% when you have a valid W-8BEN on file. If you are in the 30% slab, Indian tax with cess is 31.2%, so a small balance remains after the foreign tax credit. 3. RSU sales. Your employer taxes the perquisite at vest through payroll. Any gain or loss after vesting, when you sell, is a separate capital gain with no TDS.

What changed with the Income-tax Act, 2025

The Income-tax Act, 2025 came into force on 1 April 2026. It replaces "previous year" and "assessment year" with a single "tax year", so April 2026 to March 2027 is tax year 2026-27. The advance tax rules moved to new section numbers but the substance is the same:

One drafting change: section 425 states the deferment interest as a flat 3% of the shortfall for the June, September and December instalments and 1% for March, instead of "1% per month for three months". The cost works out the same.

Payments for the year that ended on 31 March 2026 (the old FY 2025-26) stay under the 1961 Act.

There is also a small safe harbour in section 425(2): no deferment interest is charged for the June instalment if you paid at least 12% of the year's tax by 15 June, or for the September instalment if you paid at least 36% by 15 September.

How the capital gains relief works

Under section 425(4), no deferment interest is charged on a shortfall caused by under-estimating, or not estimating, capital gains or dividend income, provided you pay the tax on that income in full in the remaining instalments, or by 31 March of the tax year if no instalment is left. Deemed dividends are excluded from this relief, but ordinary dividends from US companies are the normal kind.

The Act does not list dates for each gain, so the list below is practical guidance that follows from that rule:

• Gain in April–mid June: include the tax in the 15 June instalment.
• Gain between 16 June and 15 September: pay it with the 15 September instalment.
• Gain between 16 September and 15 December: pay it by 15 December.
• Gain between 16 December and 15 March: pay it by 15 March.
• Gain between 16 and 31 March: pay it by 31 March. Tax paid by 31 March still counts as advance tax for that year.

The relief only works if you actually pay. If you leave the tax until you file your return, the relief is lost and interest is worked out as if you should have paid instalments from June.

The cautious reading of "in the remaining instalments" is to pay the whole tax on a gain by the very next due date, rather than spreading it at 75% and 100%. That leaves nothing to argue about.

How much to pay on each type of income

Work out the tax on each item using the normal rules (see our US stock tax guide for the full rules):

• STCG (held 24 months or less): your slab rate plus 4% cess.
• LTCG (held more than 24 months): 12.5% plus 4% cess, with no indexation (section 197). US shares do not get the ₹1.25 lakh exemption, which is meant for STT-paid listed Indian equity and equity funds.
• Dividends: slab rate plus 4% cess, less the US tax withheld, which you can claim as a foreign tax credit up to the 25% treaty rate and up to the Indian tax on that dividend. For advance tax, it is common practice to pay only the balance after this credit. The credit itself is claimed in your return, and needs the foreign tax credit statement filed on time. From tax year 2026-27 that statement is Form 44, filed under Rule 76 of the Income-tax Rules, 2026 (Form 67 still applies for FY 2025-26 and earlier). See our Form 67 guide and US dividend tax guide.

Convert both the cost and the sale price to rupees at the State Bank of India telegraphic transfer (TT) buying rate for the relevant dates, and take the gain as the difference in rupees. Do not convert the dollar gain at a single rate; for shares held a few years, that usually understates the gain because the rupee has weakened. Our calculator does this for each trade.

Then subtract what is already covered: TDS on salary and interest, and TCS on your LRS remittances. Advance tax is due on the balance.

Set off losses first: a short-term loss can reduce short-term or long-term gains of the same year.

Worked example: a gain in October

Priya is a resident software engineer in Pune, on the new tax regime, with a salary of about ₹32 lakh. Income above ₹24 lakh is taxed at 30% under the new regime, so her top slab is 30%. Her employer's TDS fully covers the tax on her salary. With the gains below, her total income is about ₹44 lakh, under ₹50 lakh, so no surcharge applies.

In October 2026 she sells two lots in her US brokerage account. The prices and exchange rates below are assumed for illustration.

Lot A: long-term (held 3 years)

• Sale: $28,000 × ₹90.00 (assumed SBI TT buying rate at sale) = ₹25,20,000
• Cost: $20,000 × ₹82.00 (assumed rate at purchase in 2023) = ₹16,40,000
• Gain: ₹25,20,000 − ₹16,40,000 = ₹8,80,000
• Tax at 12.5%: ₹8,80,000 × 12.5% = ₹1,10,000
• Cess at 4%: ₹1,10,000 × 4% = ₹4,400
• Tax on Lot A: ₹1,14,400

Lot B: short-term (held 10 months)

• Sale: $13,000 × ₹90.00 = ₹11,70,000
• Cost: $10,000 × ₹90.60 (assumed rate at purchase in December 2025) = ₹9,06,000
• Gain: ₹11,70,000 − ₹9,06,000 = ₹2,64,000
• Tax at 30%: ₹2,64,000 × 30% = ₹79,200
• Cess at 4%: ₹79,200 × 4% = ₹3,168
• Tax on Lot B: ₹82,368

Total tax on the October gains: ₹1,14,400 + ₹82,368 = ₹1,96,768. This is well above ₹10,000, so advance tax applies.

Option 1: pay ₹1,96,768 by 15 December 2026. The gains arose after 15 September, so the 15 December instalment is the next one due. Paying the whole tax on them by then means no interest under section 425 or section 424.

Option 2: pay nothing until she files in July 2027. The section 425(4) relief is lost, so deferment interest is worked out on the full ₹1,96,768 at every instalment:

• 15 June: 15% × ₹1,96,768 = ₹29,515 shortfall × 3% = ₹885
• 15 September: 45% × ₹1,96,768 = ₹88,546 × 3% = ₹2,656
• 15 December: 75% × ₹1,96,768 = ₹1,47,576 × 3% = ₹4,427
• 15 March: 100% × ₹1,96,768 × 1% = ₹1,968
• Section 425 interest: about ₹9,936

She has also paid less than 90% of her tax by 31 March, so section 424 adds 1% for every month or part of a month from 1 April 2027 until she pays. Assume she pays with her return by 31 July 2027. That is four months (April, May, June, July): ₹1,96,768 × 1% × 4 = about ₹7,871.

Total interest for waiting: roughly ₹17,800. The actual figure will differ slightly because amounts are rounded under the rules, but the order of magnitude is the point. Paying by 15 December costs nothing extra.

Adding a dividend. Say Priya also receives a $400 dividend in November. At an assumed ₹90.00, that is ₹36,000. The US withheld 25%, or ₹9,000. Indian tax at 31.2% (30% plus cess) is ₹11,232. After the foreign tax credit of ₹9,000, she owes ₹2,232 more. Adding this to her 15 December payment makes it ₹1,96,768 + ₹2,232 = ₹1,99,000.

How to pay

Log in to the income tax e-filing portal and go to e-File > e-Pay Tax > New Payment. Choose the "Income Tax (Advance Tax, Self-Assessment Tax, etc.)" tile, pick the year the portal offers for tax year 2026-27 (the label on the screen may still read "Assessment Year"), and select Advance Tax as the type of payment (minor head). Pay by net banking, UPI, card or at a bank counter. Keep the challan identification number (CIN); you will need it when you file. Check that the payment shows in your tax credit statement (earlier Form 26AS) or Annual Information Statement within a few days.

Who this does not apply to

• Resident individuals aged 60 or more at any time during the tax year, with no business or professional income, do not have to pay advance tax (section 403).
• Non-residents and RNORs are generally not taxed in India on gains from foreign shares. This post assumes you are resident and ordinarily resident.
• Surcharge is not covered here. If your total income is above ₹50 lakh, surcharge applies and the tax figures above will be higher.

Before 15 December: a quick checklist

1. Pull realised gains, losses and dividends since April 2026 from your broker or our portfolio tracker, and net the losses. 2. Work out the tax, less foreign tax credit, TDS and TCS. 3. If the balance is ₹10,000 or more, pay by 15 December. Set a reminder for 15 March for later sales.

If you hold RSUs, our RSU tax guide explains how vest-time tax and sale-time gains fit together.

Disclaimer: This is general information, not tax advice. Check your situation with a qualified tax professional.

References

1. Section 403 – Liability for payment of advance tax, Income-tax Act, 2025 – Income Tax Department 2. Section 404 – Conditions of liability to pay advance tax, Income-tax Act, 2025 – Income Tax Department 3. Section 405 – Computation of advance tax, Income-tax Act, 2025 – Income Tax Department 4. Section 408 – Instalments of advance tax and due dates, Income-tax Act, 2025 – Income Tax Department 5. Section 424 – Interest for defaults in payment of advance tax, Income-tax Act, 2025 – Income Tax Department 6. Section 425 – Interest for deferment of advance tax, Income-tax Act, 2025 – Income Tax Department 7. Income-tax Act, 2025 comes into force from 1st April, 2026 – Income Tax Department (commencement date) 8. Section 197 – Tax on long-term capital gains, Income-tax Act, 2025 – Income Tax Department 9. Tax rates as per IT Act vis-à-vis Indo-US DTAA – Embassy of India, Washington DC (25% treaty rate on dividends) 10. FAQs on Form No. 44 and Form No. 45 (foreign tax credit) – Income Tax Department 11. Create Challan Form (CRN) user manual – Income Tax Department e-filing portal 12. Advance Tax Under Income Tax Act, 2025: Liability, Due Dates & Interest – TaxGuru (old-to-new section mapping, transition for FY 2025-26)