Advance Tax Planning & Payment

Advance tax obligations are governed by Sections 208 to 211 and the interest provisions under Sections 234B and 234C of the Income Tax Act, 1961.

Section 211(1)(b) — Instalment schedule (for assessees other than those covered by the presumptive scheme): at least 15% of advance tax payable by 15 June, 45% (cumulative) by 15 September, 75% (cumulative) by 15 December, and 100% by 15 March of the financial year.

Presumptive taxation assessees — taxpayers computing income under Section 44AD or Section 44ADA must pay their entire advance tax liability in a single instalment on or before 15 March.

Section 234B(1) — Interest for default in payment: Where advance tax paid is less than 90% of the assessed tax, simple interest at 1% per month (or part of a month) is charged on the shortfall, from 1 April of the assessment year until the date of determination of income under Section 143(1) or regular assessment.

Section 234C(1)(a)/(b) — Interest for deferment: Interest at 1% per month is levied where the instalments paid by 15 June, 15 September and 15 December fall short of 12%, 36% and 75% of the tax due respectively; a shortfall relating to the 15 March instalment attracts interest at 1% for one month under the residual clause of Section 234C.

Exemptions: Interest under Section 234C is not levied for a shortfall attributable to capital gains, winnings, or similarly unpredictable income, provided the tax on such income is paid in the immediately following instalment.

This service structures quarterly advance tax computation, instalment tracking, and interest-exposure estimation under Sections 211, 234B, and 234C.

Advance tax planning is the practice of paying income tax through the year in four instalments under Section 211 of the Income Tax Act 1961 — 15% by 15 June, 45% by 15 September, 75% by 15 December and 100% by 15 March — while actively managing the size of each instalment to your real income. Where a basic computation just works out the number, planning is about the timing: recognising profit when it is earned, claiming deductions before the instalment date, and using the provisions that let irregular income be paid later without penalty.

A well-planned schedule does more than avoid interest — it avoids overpayment. Many business owners either pay nothing and suffer interest under Sections 234B and 234C, or pay a full conservative amount in June and starve their working capital. The Act itself gives planning room: where income such as capital gains or lottery winnings arises after 15 March, the tax on it can be paid by 31 March without the deferment interest under Section 234C — the Explanation to Section 234C protects the taxpayer who pays by the year-end.

Skipping the plan is expensive in the quietest way possible. Section 234B charges interest at 1% per month where the tax paid falls short of 90% of the assessed liability, and Section 234C charges for the deferment of each instalment. These amounts are calculated by the department automatically and appear on your notice — not as a penalty you can contest, but as interest computed under the statute.

This service is for business owners, professionals, investors with capital gains, and companies whose income is irregular or seasonal. We model your year-end position, plan deductions before each instalment date, handle the capital-gains timing rules, and give you a payment calendar — so the tax you owe is the tax you pay, and nothing more.