Advance tax, governed by Sections 207 to 211 of the Income Tax Act, 1961 (and Clauses 401 to 408 of the Income Tax Bill, 2025), requires taxpayers to estimate their current year’s income and pay taxes in instalments during the financial year itself. Any person whose estimated tax liability is ₹10,000 or more in a financial year is liable to pay advance tax. The tax is applicable on all taxable income, including capital gains, winnings from lotteries, puzzles, races, and other specified incomes. However, resident senior citizens without income from business or profession are exempt. The computation under Section 209 requires calculation of estimated current income and applying the tax rates in force. Payment can be made online through Challan ITNS 280 or via authorized banks, with electronic payment being mandatory for companies and assessees liable for audit under Section 44AB. Section 211 prescribes four instalments: 15% by 15th June, 45% by 15th September, 75% by 15th December, and the full amount by 15th March. Taxpayers under presumptive taxation (Sections 44AD/44ADA) must pay 100% advance tax by 15th March. If income from capital gains or winnings arises after 15th March, tax must be paid by 31st March. The advance tax system ensures “pay-as-you-earn” compliance, reducing the burden of lump-sum tax payments at year-end.
WHEN ADVANCE TAX IS TO BE PAID?
Sections 207 to 211 explain about advance tax payable by whom, what are the conditions, how to compute payment of advance tax, it is to be paid in instalments etc. under the Income Tax Act, 1961. The same things are explained under Clauses 401 to 408 of Income Tax Bill, 2025.
What is Advance Tax?
The scheme of advance tax requires all assesse to estimate their current year’s income and tax liability on that income, exceeds the specified limit, the assesse is required to pay the estimated tax in instalments during the financial year itself. Thus, an assesse is required to pay tax as he earns. We can say that earn and pay tax accordingly.
Income subject to advance tax: (Section 207)
The advance tax shall be payable on all the items of income included in the total income chargeable to tax for the financial year in which the advance tax is payable. In the case of capital gains, winnings from lotteries, crossword puzzles, races including horse races, card games, and other games, gambling or betting are also to be considered for advance tax payment.
It may be noted that the provisions of section 207(1), shall not apply to an individual resident in India, who does not have any income under the head, ‘ Profit and gains of business or profession’ and is a senior citizen is not required to advance tax during the financial year 2012-13 and on words.
Every person, whose estimated tax liability for the Financial Year is Rs. 10,000 or more, is liable to pay advance tax.
Computation of advance tax: (Section 209)
An assesse calculate that his total income during the financial is much higher than the tax calculation of Rs.10,000, and is liable to pay advance tax for the financial year 2025-26. Now the question arise in his mind that when and how much tax is to be paid?
Where the calculation is made by the assesse for the purpose of advance tax, he shall first calculate his current income and then calculate the income tax thereon at the rate in force in the financial year.
How to pay advance tax?
The advance tax can be paid online (electronically) or through an authorized bank, by submitting the details in Challan No. ITNS 280. Of course it is mandatory for a Company or a person (other than a Company) who is required to get his accounts audited under section 44AB to pay the taxes through on line mode only.
Due dates for payment of advance tax: (Section 211)
Advance tax calculated under section 209 on the current income shall be payable in four instalments during each financial year. Under section 211(1)(a) of the Act, due date of payment and the amount payable in each installment during financial year is indicated in the following table:
| Due date of instalment | Amount payable | |
| 01. | On or before 15 th June | Not less than 15% of such Advance tax. |
| 02. | On or before 15 th September | Not less than 45% of such Advance tax, as reduced by the amount, if any, paid in the earlier instalment. |
| 03. | On or before 15 th December | Not less than 75% of such Advance tax, as reduced by the amounts, if any, paid in the earlier instalments. |
| 04. | On or before 15 th March | The whole amount of such advance tax as reduced by amount or amounts, if any, paid in the earlier instalments. |
In the case of an assesse who declares profits and gains in accordance with the provisions of Section 44AD(1) or Section 44ADA(1), as the case may be is required to pay 100% of the advance tax as calculated u/s 209 on the current year income, on or before 15th March.
Where the current years income includes, capital gains or winnings from lotteries, crossword puzzles, races etc. if the income accrues or arises after 15th March, after payment of last instalment of advance tax payable thereon, should be paid on or before 31st March.
During the year due date for submitting return of income of non-audited assesse is 15th September, so assesses are in puzzle that whether advance tax is to pay or tax u/s 140A?
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