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Advance Tax Applicability and Calculation of Advance Tax under section 208

In India, a taxpayer is required to pay advance tax on fulfilling certain criteria as provided under section 208 of the Income Tax Act. Today in this article we will discuss the Applicability of advance tax and who is liable to pay advance tax during the year.

Who is required to pay Advance Tax?

Every taxpayer whose total estimated tax liability for the year is more than Rs.10,000 is required to pay advance tax. Advance Tax is payable on all the income whether it's a business income or capital gain or salary or any other source of income.

Who is not required to pay Advance Tax?

Following taxpayers are not required to pay advance tax:

  • Whose estimated tax liability is less than Rs.10,000 in a financial year

  • Resident Senior Citizen (60 years or more) not having business/profession Income

How to calculate Advance Tax liability?

Advance tax is to be calculated as per slab rates on estimated income during the financial year. From AY 2021-22, a taxpayer has an option to pay tax under the new regime or old regime subject to certain conditions. Also, while calculating advance tax, the effect of the rebate under section 87A where total Income does not exceed Rs.5,00,000 is to be considered, and education cess @ 4% is to be levied on Income Tax.

Also, deductions if any, such as under 80C, 80CCC, 80CCD, 80D, 80G, 80E, Deduction for Interest on Home loan under section 24, etc shall be reduced to calculate taxable income.

The due date for advance tax payment:

The due date for advance tax payment is as follows:

Point to be noted for Advance Tax:

A taxpayer having income from salary, business (other than presumptive) and any other source of income including capital gain shall pay advance tax as above.