Advance Tax · s.208–211 · s.234B · s.234C · Due Dates
Advance tax: who owes it, the four due dates, and the interest you pay for getting them wrong.
Most people discover advance tax in March — after the interest has been running for months. The statute is mechanical: three instalment dates, one deadline, and interest for each missed one.
The four issues
Where this area actually goes wrong.
Each of the four pillars below is statute-cited — the section, the form, and the consequence. No vague claims.
Who must pay — s.208 and s.209
Any person whose estimated tax liability for the financial year is ₹10,000 or more must pay advance tax — s.208 read with s.209 of the Income-tax Act. It covers income not subject to full TDS: business and professional income, capital gains, rental income, FD and savings interest, and freelance receipts. The salaried exemption is narrow: if your employer deducts TDS equal to at least 90% of your total tax liability for the year, you are not required to pay advance tax (proviso to s.209(1)(d)). Everyone else — including a salaried person with rental or interest income — is on the instalment schedule.
s.208–209 · ₹10,000 threshold · TDS ≥90% exemption only
The instalment schedule — s.211
Section 211 fixes the due dates and cumulative percentages: 15 June — 15% of estimated tax, 15 September — 45%, 15 December — 75%, and 15 March — 100%. The proviso to s.211(2) protects lumpy income: income (like a capital gain or bonus) arising after an instalment date can be paid in the next instalment, and income arising after 15 March can be paid by 31 March without penalty. Presumptive taxpayers under s.44AD, s.44ADA and s.44AE pay the whole amount in a single instalment by 15 March (proviso to s.211(1)).
s.211 · 15 Jun/Sep/Dec/Mar · 15/45/75/100% · 44AD one-shot by 15 Mar
Interest for getting it wrong — s.234B and s.234C
Section 234B: if the advance tax paid falls short of 90% of the assessed tax, simple interest at 1% per month runs from 1 April on the shortfall until payment. Section 234C: if you skip or defer an instalment, interest at 1% per month runs on the deferred amount — three months for each of the first three instalments, one month for the last. The two stack. A ₹5 lakh shortfall held until March costs roughly ₹50,000 under 234B alone, before 234C. Interest is simple, but it compounds across both sections and both the underpayment and the deferral.
234B 1%/mo from 1 Apr · 234C 1%/mo per instalment · both stack
What counts — the current-year estimate
Advance tax is computed on your CURRENT-year estimate: projected income minus deductions under 80C–80U, minus TDS and TCS already deducted by others. If you realise mid-year that your estimate was low, pay the shortfall in the next instalment — the schedule self-corrects. If you discover the shortfall only after 15 March, pay it as self-assessment tax under s.140A before filing the return; the payment stops 234B interest running from the date of payment, though not retrospectively. The practical rule: an estimate is better than none, and a March top-up is better than nothing at all.
current-year estimate · s.140A top-up by 31 Mar · TDS/TCS credits deducted
The honest angle
Why most people pay 234B interest without knowing it
Advance tax is not complicated — it is just undiscoverable until the interest appears in your assessment order. These four beliefs are where the interest actually comes from.
"My employer deducts TDS"
The exemption requires TDS to cover 90% of total liability. Add FD interest or rental income and the 90% test fails — the salary TDS alone stops protecting you.
"I will pay it all in March"
The March instalment is only the final 25%. Deferring the earlier 75% triggers 234C on each missed instalment, and the unpaid balance draws 234B from 1 April regardless of when you pay.
"Interest is small"
At 1% per month simple, a ₹2 lakh shortfall paid four months late costs ₹8,000 under 234B plus 234C on the deferred instalments. Across a few years it is real money — and it is pure waste, not tax.
"My CA will fix it in the return"
The return does not fix advance-tax interest. It is computed automatically by the CPC against the instalment schedule. The only lever is paying on time — or paying more before 31 March.
Our engagement
Five tracks for a clean advance-tax year.
Advance tax computation
Quarterly current-year estimate — income, 80C–80U deductions, TDS/TCS credits — with a written instalment plan.
Quarterly
Instalment calendar and challans
Challan ITNS-280 filings on 15 Jun/Sep/Dec/Mar with the right major head (0020) and nature of payment codes.
Quarterly
44AD / 44ADA one-instalment planning
Single 15 March instalment for presumptive taxpayers — with the 90% test run on any other income lines.
Annual
Lumpy income timing
Capital gains, bonuses and late-year receipts mapped against the s.211(2) proviso so you never prepay — and never miss.
Event-driven
Self-assessment top-up
s.140A payment before 31 March to stop 234B interest, with the shortfall traced back to its source.
Annual
FAQs
Five questions people ask before their first instalment.
I am salaried and my employer deducts TDS. Do I need to pay advance tax?
Only if the TDS deducted falls short of 90% of your total tax liability for the year — the proviso to s.209(1)(d) exempts you only while that test is met. The test fails as soon as you have income without full TDS: rental income, FD or savings interest above the TDS threshold, capital gains, or a job switch mid-year where the new employer starts from a clean slate. Run the 90% test with your projected year-end income, not your current payslip.
What are the exact advance tax due dates and percentages?
Under s.211: 15 June — 15%, 15 September — 45%, 15 December — 75%, and 15 March — 100% of estimated tax. The percentages are cumulative. Presumptive taxpayers under s.44AD, s.44ADA and s.44AE pay 100% in a single instalment by 15 March. Income arising after 15 March (for example, a late-year capital gain) can be paid by 31 March under the proviso to s.211(2).
I sold property in December. Do I have to pay advance tax on the capital gains by 15 December?
Yes — that is exactly how the schedule works. The proviso to s.211(2) says income arising after an instalment date is included in the next instalment. A gain realised in December (after the 15 September instalment) is payable by 15 December; a gain realised after 15 December is payable by 15 March; and a gain realised after 15 March can be paid by 31 March. The trap is assuming gains are exempt from advance tax entirely — they are not, they are just timed.
What interest do I actually pay if I skip advance tax?
Two sections, and they stack. s.234B: if paid advance tax is below 90% of assessed tax, simple interest at 1% per month runs on the shortfall from 1 April. s.234C: if you skip or underpay an instalment, interest at 1% per month runs on the deferred amount — three months for the 15 June, 15 September and 15 December instalments, one month for 15 March. A ₹3 lakh shortfall discovered in March attracts 234B for the full year plus 234C on each missed instalment.
I missed all the instalments. Can I pay now and avoid the interest?
You can pay — but the interest is already running. Payment as self-assessment tax under s.140A before you file the return stops 234B interest from the date of payment; it does not erase the months already accrued, and it does not touch 234C, which is computed on the timing of the missed instalments. The return itself gives no relief: the CPC computes both interests mechanically against the instalment schedule. Paying something now is still strictly better than paying nothing — and it is why the March top-up habit matters.
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