Provisions regarding Advance Payment of Tax under Income Tax act 1961

Provision regarding Advance Payment of Tax

Liability to pay advance tax 

As per section 208, every person whose estimated tax liability for the year is Rs. 10,000 or more, shall pay his tax in advance, in the form of “advance tax”. In this part you can gain knowledge on various provisions relating to payment of advance tax by a taxpayer.

Person not liable to pay advance tax

 As discussed above, every person whose estimated tax liability for the year is Rs. 10,000 or more is liable to pay advance tax. However, a resident senior citizen (i.e., an individual of the age of 60 years or above during the relevant financial year) not having any income from business or profession is not liable to pay advance tax.

The normal tax rates for the financial year 2018-19 applicable to an individual below the age of 60 years are as follows: 

•  Nil upto income of Rs. 2,50,000 [As amended by Finance Act, 2018]
•  5% for income above Rs. 2,50,000 but upto Rs. 5,00,000 
•  20% for income above Rs. 5,00,000 but upto Rs. 10,00,000
•  30% for income above Rs. 10,00,000.

 However in case of taxpayer, being an Individual resident in India, rebate under section 87A of Rs. 2,500 or 100% of tax, whichever is lower, would be provided if his total income does not exceed Rs. 3,50,000. 

Apart from above, health and education cess @ 4% will be levied on the amount of tax

Mode of payment of advance tax

As per Rule 125 of the Income-tax Rules, 1962 a corporate taxpayer (i.e., a company) shall pay taxes through the electronic payment mode using the internet banking facility of the authorised banks. Taxpayers other than a company, who are required to get their accounts audited, shall pay taxes through the electronic payment mode using the internet banking facility of the authorised banks. Any other taxpayer can pay tax either by electronic mode or by physical mode i.e. by depositing the challan at the receiving bank. 

Payment of advance tax

Advance tax can be paid by the taxpayer either on his own account or in pursuance of an order of the Assessing Officer. The taxpayer who is liable to pay advance tax is required to estimate his current income and pay advance tax on his own account. In such a case, he is not required to submit any estimate or statement of income to the tax authorities. After making payment of first or second or third instalment of advance tax (as the case may be), if there is a change in the tax liability, then the taxpayer can revise the quantum of advance tax in the remaining instalment(s) and pay the tax as per revised estimates. Tax can be computed on the current income (estimated by the taxpayer) at the rates in force during the financial year. From the tax so computed, tax deducted or collected at source will be deducted and the balance tax payable will be used to compute the advance tax liability. Also, relief of tax allowed under section 90 or section 90A or any deduction under section 91 or any tax credit allowed to be set off as per section 115JAA or section 115JD shall also be deducted while computing the advance tax liability.

Due dates for payment of advance tax


Advance tax is to be paid in different instalments. The due dates for payment of different instalments of advance tax are as follows:

Due Date for Payment of Advance Tax	Advance Tax Payable
On or Before 15th June	15% of Tax Payable
On or Before 15th September	45% of Tax Payable
On or Before 15th December	75% of Tax Payable
On or Before 15th March	100% of Tax Payable

Interest for default in payment of Advance Tax

S.No.	Interest under Section	Rate of Interest	Why Charged?
1	234 C	1% per month for a period of 3 months (1 Month in case of Last Installment) on the amount of Default in each Installment**	For Non-Payment of Advance Tax on or before the Due Date
2	234 B	1% per month or part of a month from 1st April of Assessment Year upto the Date of Payment*	For payment of Tax in Assessment Year
3	234 A	1% per month or part of a month for the period beyond the due date of filing return of income	For payment of tax beyond the due date of filing return of income.

* If 12% of Tax Liability has been paid upto 15th June and 36% of Tax Liability has been paid upto 15th September then The Interest u/s 234C shall not be charged on such Default.

*The Interest Under Section 234B shall not be Charged if Advance Tax Paid by the Assessee is 90% or more of the Actual Tax Liability of the Assessee.