Advance Tax Computation under Sections 208 to 211
Under the Income-tax Act, 1961, Advance Tax (popularly known as the “pay-as-you-earn” scheme) requires taxpayers to pay their income tax in quarterly installments throughout the financial year rather than as a lump sum at the year-end.
Who is Liable to Pay Advance Tax? (Section 208)
Under Section 208, every taxpayer whose estimated net tax liability for the financial year exceeds ₹10,000 (after accounting for TDS/TCS and rebates) is legally obligated to pay advance tax.
Exemption for Senior Citizens: Resident individuals aged 60 years or older who do not have any income from business or profession are completely exempt from advance tax under Section 207.
Statutory Advance Tax Installment Schedule (Section 211)
| Installment Due Date | Cumulative Advance Tax Payable | Challan to Use |
|---|---|---|
| On or before 15th June | Not less than 15% of estimated net tax | Challan ITNS 280 |
| On or before 15th September | Not less than 45% of estimated net tax | Challan ITNS 280 |
| On or before 15th December | Not less than 75% of estimated net tax | Challan ITNS 280 |
| On or before 15th March | 100% of estimated net tax liability | Challan ITNS 280 |
Penal Interest under Sections 234B & 234C
- Section 234C (Deferment of Installments): Simple interest at 1% per month is charged on the shortfall if the quarterly installments are not paid as per the statutory schedule (15%, 45%, 75%, 100%).
- Section 234B (Default in Payment): If total advance tax paid before 31st March is less than 90% of the assessed tax, interest at 1% per month is levied from 1st April of the Assessment Year until the date of determination.