With the concept of “pay as you earn”, Government of India has provided for payment of advance Tax under the Income tax Act.

Tax shall become payable in advance during any financial year in respect of the Income earned by  an assessee  which would be chargeable to tax for the Assessment Year immediately following that financial year. Advance tax is payable during the financial yearin every case where the amount of such taxpayable by the assessee during the year is Rs. 10,000 or more.

However, an individual resident in India of the age of 60 years or more at any time during the year who does not have any income from PGBP, is not liable to pay advance tax.

Instalments of advance tax and due dates [Section 211]

Advance tax payment schedule for corporates and non- corporates (other than an assessee computing profits on presumptive basis u/s 44AD or section 44ADA)- Four Instalments

Due dates of instalments	Amount payable
On or before 15th June	Not less than 15% of advance tax liability
On or before 15th September	Not less than 45% of advance tax liability (-) amt paid in earlier instalment
On or before 15th December	Not less than 75% of advance tax liability (-) amt paid in earlier instalments
On or before 15th March	The whole amount of advance tax liability (-) amt paid in earlier instalments

Advance tax payment by assesses computing profits on presumptive basis u/s 44ADAD(1) or 44ADA(1)

An eligible assessee, opting for computation of profits or gains of business or profession on presumptive basis in respect of eligible business referred to in section 44AD(1) or in respect of eligible profession referredto in section 44ADA(1), shall be required to pay advance tax of the whole amount on or before 15^thMarch of the financial year.

However, any amount paid by way of advance tax on or before 31^st March shall be treated as advance tax paid during the F.Y. ending on that day.

Interest for defaults in payment of advance tax (Section 234B)

1.  Interest u/s 234B is attracted for non- Payment of advance tax or payment of advance tax of an amount less than 90% of assessed tax.

2. The interest liability would be 1% per month or part of the month from 1^st April following the F.Y.  upto the date of determination of total income u/s 143(1).

3. Such interest is calculated on the amount of difference between the assessed tax and the advance tax and the advance tax paid.

4. “Assessed tax” means the tax on total income determined u/s 143(1) less TDS & TCS, any relief of tax allowed u/s 89, any tax credit allowed to be set off in accordance with the provisions of section 115JD.

5. Where self-assessment tax is paid by the assessee u/s 140A or otherwise, interest shall be calculated upto the date of payment of such tax and reduced by the interest, if any, paid u/s 140A towards the interest chargeable under this section.

Interest for deferment of advance tax(Section 234C)

a. Manner of computation of interest u/s 234C for deferment of advance tax by assessee, being an individual:

In case an assessee, other than an assessee who declares profits and gains in accordance with the provisions of section 44AD(1) or section 44ADA(1), who is liable to pay advance tax u/s 208 has failed to pay such tax or the advance  tax paid by such assessee on its current income on or before the dates specified in column (1) below is less than the specified percentage (given in column (2) below) of tax due on returned income, then simple interest @ 1% per month for the period specified in column (4) on the amount of shortfall, as per column(3) is leviable u/s 234C.

Specified date	Specified %	Shortfall in advance tax	Period
1	2	3	4
15th June	15%	15% of tax due on returned income(-) advance tax paid upto 15th June	3 months
15th September	45%	45% of tax due on returned income(-) advance tax paid upto 15th September	3 months
15th December	75%	75% of tax due on returned income(-) advance tax paid upto 15th December	3 months
15th March	100%	100% of tax due on returned income(-) advance tax paid upto 15th March	3 months

Note– However, if the advance tax paid by the assessee on the current income, on or before 15^th June or 15^th September, is not less than 12% or 36% of the tax due on the returned income, respectively, then, the assessee shall not be liable to pay any interest on the amount of the shortfall on those dates.

Tax due on returned income= Tax chargeable on TI declared in the return of income(-) TDS (-) TCS (-) any relief of tax allowed u/s 89 (-0 any tax credit allowed to be set off in accordance with section 115JD.

b. Computation of interest u/s 234C in case of an individual who declares profits and gains in accordance with the provisions of section 44AD(1) or AAADA(1):

In case an assessee, who declares profits and gains in accordance with the provisions of section 44AD(1) or 44ADA(1), who is liable to pay advance tax u/s 208 has-

• Failed to pay such tax or
• The advance tax paid by the individual on his current income on or before 15^th March is less than the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of 1% on the amount of the shortfall from tha tax due on the returned income.

c. Non – applicability of interest u/s 234C in certain cases:

Interest u/s 234C shall not be leviable in respect of any shortfall in payment of tax due on returned income, where such shortfall is on account of under-estimate or failure to estimate-

i. the amount of capital gains;

ii. income of nature of winnings from lotteries, crossword puzzles etc;

iii. income being  “PGBP” in cases where the income accrues or arises under the said head for the first time.

iv. the amount of dividend income other than deemed dividend referred u/s 2(22)(e). However, the assessee should have paid the whole of the amount of tax payable in respect of such income referred to in (i), (ii), (iii) and (iv) as the case may be, had such income been part of the TI, as part of the remaining instalment of advance tax which are due or where no such instalments are due, by 31^st March of the financial year.