Advance Payment of Tax, Concepts, Provisions, Applicability, Role, Exemptions, Adjustments and Refunds

Advance Tax, also known as “pay-as-you-earn” taxation, plays a critical role in the Indian income tax system. It requires taxpayers to pay income tax in installments throughout the year, rather than a lump sum payment at the year-end. This approach aims to ease the burden of a large end-of-year tax payment for the taxpayer and to facilitate a steady income flow to the government throughout the fiscal year. The governing provisions for advance tax are primarily found in Sections 207 to 219 of the Income Tax Act, 1961.

Advance Tax refers to the payment of income tax by a taxpayer in instalments during the financial year instead of paying the entire tax amount at the end of the year. It is also known as the “pay as you earn” scheme because tax is paid in advance on the estimated income earned during the year. The provisions relating to advance tax are contained in the Income-tax Act, 1961. It applies when the tax liability of a taxpayer, after considering TDS and other credits, exceeds the prescribed limit. Advance tax ensures regular collection of revenue by the Government.

Provisions for Advance Tax Payment

1. Applicability of Advance Tax

Advance tax provisions apply to taxpayers whose estimated tax liability for a financial year is ₹10,000 or more after deducting TDS, TCS, and other available tax credits. It applies to individuals, Hindu Undivided Families (HUFs), firms, companies, LLPs, and other persons having taxable income. Salaried employees generally do not need to pay advance tax if their employer deducts sufficient TDS from salary. However, if they earn additional income from business, profession, capital gains, rent, interest, or other sources, they may become liable to pay advance tax. Senior citizens who do not have income from business or profession are generally exempt from advance tax liability. The applicability ensures that taxpayers having substantial tax obligations contribute regularly to Government revenue during the financial year rather than paying the entire tax amount at the end.

2. Estimation of Tax Liability

A taxpayer liable to pay advance tax must first estimate the total income expected during the financial year. The estimated income includes income from salary, house property, business or profession, capital gains, and other sources. After calculating the total taxable income, the taxpayer determines the estimated tax liability according to the applicable tax rates. From this amount, TDS, TCS, and other tax credits are deducted to arrive at the advance tax payable. Taxpayers should regularly review their estimated income because changes in income, deductions, or exemptions may affect the final tax liability. If income increases during the year, additional advance tax must be paid to avoid interest charges. Accurate estimation helps taxpayers meet their obligations, avoid penalties, and ensure that the tax paid during the year is close to the actual tax liability.

3. Instalments and Due Dates of Advance Tax Payment

Advance tax is required to be paid in specified instalments during the financial year. For most taxpayers, the payment schedule is divided into four instalments:

• 15 June: 15% of total advance tax liability
• 15 September: 45% of total advance tax liability
• 15 December: 75% of total advance tax liability
• 15 March: 100% of total advance tax liability

Taxpayers may pay more than the required percentage in earlier instalments. The objective of this system is to spread tax payments throughout the year and ensure regular revenue collection for the Government. Failure to pay the required instalments on time may result in interest liability under the Income-tax Act. Therefore, taxpayers must monitor their income and make timely payments according to the prescribed schedule.

4. Payment of Advance Tax by Presumptive Taxpayers

Taxpayers covered under the presumptive taxation schemes of Section 44AD (eligible business) and Section 44ADA (specified professionals) have special provisions for advance tax payment. Such taxpayers are required to pay their entire advance tax liability in one instalment on or before 15 March of the financial year. Payment made by 31 March is also treated as valid advance tax payment. These provisions simplify tax compliance for small businesses and professionals by reducing the requirement of multiple instalments. Presumptive taxpayers calculate income based on the prescribed percentage of turnover or receipts and pay tax accordingly. This simplified system encourages small taxpayers to comply with tax laws while reducing administrative complexity.

5. Mode of Payment of Advance Tax

Advance tax must generally be paid through the online tax payment system provided by the Income Tax Department. Taxpayers are required to select the correct assessment year, type of tax, and payment details while making the payment. After successful payment, a challan receipt is generated, which serves as proof of payment. Digital payment facilities make the process faster, transparent, and convenient. Taxpayers should preserve payment receipts for future reference and while filing Income-tax Returns. Online payment systems also help the Income Tax Department track tax collections efficiently and update taxpayer records. Timely and accurate payment of advance tax through the prescribed mode ensures compliance and avoids unnecessary interest or penalty consequences.

6. Interest for Default in Payment of Advance Tax

The Income-tax Act provides for interest charges when taxpayers fail to pay advance tax properly or delay payment. Section 234B applies when a taxpayer fails to pay advance tax or pays less than 90% of the assessed tax liability. Interest is charged for the period of default. Section 234C applies when there is a delay or shortfall in payment of advance tax instalments. These interest provisions encourage taxpayers to estimate income correctly and make timely payments. Interest liability increases the financial burden of taxpayers and can be avoided through proper tax planning and regular monitoring of income. Therefore, compliance with advance tax payment schedules is essential to reduce additional costs and ensure smooth tax administration.

7. Revision of Advance Tax Estimate

Taxpayers are allowed to revise their advance tax estimates during the financial year if there are changes in income, deductions, exemptions, or tax rates. Since advance tax is based on estimated income, the actual income may differ from the initial calculation. If income increases, the taxpayer should pay additional advance tax in subsequent instalments to avoid interest liability. Similarly, if income decreases, the taxpayer may reduce the remaining advance tax payments accordingly. Regular review of income helps taxpayers maintain accuracy in tax payments and prevents either excessive payment or short payment of tax. Revision of estimates provides flexibility and ensures that advance tax payments remain aligned with the actual tax liability.

8. Difference between Advance Tax and TDS

Advance Tax and TDS are both mechanisms for collecting income tax during the financial year, but their methods are different. In TDS, tax is deducted by the person making a specified payment, such as an employer, bank, or company, before paying income to the recipient. In Advance Tax, the taxpayer directly calculates and pays tax on estimated income. TDS is applicable to specific payments covered under TDS provisions, whereas Advance Tax applies when the taxpayer’s total tax liability exceeds the prescribed limit after considering TDS credits. Both systems aim to ensure timely collection of tax revenue and reduce tax defaults. If TDS deducted is insufficient, the taxpayer must pay the remaining liability through Advance Tax.

Applicability of Advance Tax

1. Taxpayers Having Tax Liability of ₹10,000 or More

Advance Tax provisions apply to taxpayers whose estimated tax liability for a financial year is ₹10,000 or more after considering Tax Deducted at Source (TDS), Tax Collected at Source (TCS), and other available tax credits. Such taxpayers are required to pay income tax in advance through prescribed instalments during the financial year. The purpose is to ensure that tax is collected regularly instead of being paid only after the end of the year. The liability is determined based on estimated total income from all sources, including salary, business, profession, capital gains, house property, and other sources. If the final tax liability after reducing TDS and other credits exceeds the prescribed limit, the taxpayer becomes liable to pay advance tax. This provision applies to individuals, firms, companies, LLPs, and other taxable entities.

2. Applicability to Individuals

Advance tax applies to individuals who have taxable income resulting in a tax liability of ₹10,000 or more after adjusting TDS and other tax credits. Salaried individuals usually do not need to pay advance tax if their employer deducts sufficient TDS from salary. However, individuals earning additional income from sources such as business income, professional fees, rental income, capital gains, interest income, dividends, or other investments may become liable to pay advance tax. Individuals must estimate their annual income, calculate the expected tax liability, reduce TDS credits, and pay the remaining amount according to the prescribed schedule. This ensures timely tax payment and avoids interest liability for default or delay.

3. Applicability to Business and Professional Income

Advance tax is particularly applicable to persons earning income from business or profession. Business owners, traders, consultants, freelancers, doctors, lawyers, engineers, and other professionals generally do not have regular TDS deductions covering their entire tax liability. Therefore, they are required to estimate their annual income and pay tax in advance if the liability exceeds ₹10,000. Advance tax helps businesses and professionals distribute their tax payments throughout the year rather than facing a large tax burden after the financial year. Failure to pay adequate advance tax may attract interest under Sections 234B and 234C of the Income-tax Act.

4. Applicability to Companies and Firms

Companies, partnership firms, Limited Liability Partnerships (LLPs), and other business entities are required to pay advance tax if their estimated tax liability is ₹10,000 or more. These entities generally have significant taxable income and are expected to make advance tax payments in quarterly instalments. Companies must carefully estimate their profits, deductions, and tax liability to determine the amount payable. Advance tax payment helps organizations maintain compliance, avoid interest charges, and ensure proper financial planning. Non-payment or short payment may result in additional interest liability and other consequences under income tax laws.

5. Applicability to Income from Capital Gains

Advance tax provisions also apply to taxpayers earning income from capital gains such as profits from the sale of shares, securities, land, buildings, or other capital assets. Since capital gains may arise at any time during the financial year, taxpayers must estimate their additional tax liability and pay advance tax accordingly. If capital gains occur after an advance tax instalment due date, the taxpayer should pay the required tax in the next available instalment to avoid interest liability. This provision ensures that tax arising from irregular income sources is also collected during the year.

6. Applicability to Income from Other Sources

Advance tax applies to income earned from other sources when the resulting tax liability exceeds ₹10,000 after considering TDS and other credits. Such income may include interest income, dividend income, lottery winnings, rental income from movable properties, and other taxable receipts. Taxpayers receiving substantial income from these sources must calculate their expected tax liability and pay advance tax according to the prescribed instalments. This ensures that all taxable income is properly accounted for and taxed during the financial year.

7. Applicability to Presumptive Taxation Scheme

Taxpayers covered under presumptive taxation schemes under Sections 44AD and 44ADA are also required to pay advance tax. However, they receive a simplified payment facility. Such taxpayers can pay their entire advance tax liability in a single instalment on or before 15 March of the financial year. Payment made by 31 March is also considered valid. This special provision reduces compliance requirements for small businesses and professionals while ensuring timely tax collection by the Government.

8. Applicability to Senior Citizens

Senior citizens who do not have income from business or profession are generally not required to pay advance tax. However, if a senior citizen continues to earn income from business or profession and the tax liability exceeds the prescribed limit, advance tax provisions become applicable. This exemption provides relief to retired individuals whose income usually comes from pensions, interest, rental income, or investments. The provision recognizes the financial circumstances of senior citizens while ensuring that persons carrying on business activities comply with advance tax requirements.

9. Applicability After Considering TDS and TCS

Advance tax liability is determined after reducing the amount of TDS, TCS, and other tax credits available to the taxpayer. If the remaining tax payable is ₹10,000 or more, the taxpayer must pay advance tax. For example, if a taxpayer’s total tax liability is ₹1,50,000 and TDS deducted is ₹1,20,000, the remaining liability is ₹30,000. Since the balance exceeds ₹10,000, the taxpayer must pay advance tax. This provision prevents double payment of tax and ensures that taxpayers pay only the remaining amount after available credits.

10. Non-Applicability of Advance Tax

Advance tax is generally not applicable where the taxpayer’s tax liability after considering TDS, TCS, and other credits is less than ₹10,000. Salaried individuals whose entire tax liability is covered through employer-deducted TDS are usually not required to pay advance tax. Additionally, senior citizens without business or professional income are exempt from advance tax payment. However, taxpayers must carefully calculate their tax liability because failure to pay applicable advance tax may result in interest charges under the Income-tax Act.

Role of Advance Tax in Tax Planning

1. Ensures Systematic Payment of Tax

Advance tax plays an important role in tax planning by enabling taxpayers to pay their tax liability systematically throughout the financial year. Instead of paying the entire tax amount at the end of the year, taxpayers can divide their liability into instalments and manage their finances effectively. This planned approach prevents sudden financial pressure during the filing of Income-tax Returns. Individuals, businesses, and professionals can estimate their income, calculate tax liability, and make timely payments according to the prescribed schedule. Proper advance tax planning helps maintain financial discipline and ensures compliance with tax laws.

2. Helps in Better Cash Flow Management

One of the major roles of advance tax in tax planning is effective cash flow management. Paying tax in instalments allows taxpayers to plan their expenses and investments without facing a large tax burden at one time. Businesses and professionals especially benefit from advance tax because their income may fluctuate throughout the year. By estimating income and paying tax periodically, they can allocate funds efficiently for operational expenses, savings, and investments. Advance tax helps taxpayers maintain liquidity and avoid financial difficulties caused by unexpected tax payments.

3. Avoids Interest Liability

Advance tax planning helps taxpayers avoid additional interest liability under the Income-tax Act. Failure to pay advance tax or short payment of instalments may attract interest under Sections 234B and 234C. By calculating estimated income correctly and paying tax within the prescribed due dates, taxpayers can reduce or eliminate such interest charges. Proper planning ensures that tax payments are made according to the required schedule and prevents unnecessary financial costs. Therefore, advance tax is an important tool for minimizing avoidable tax-related expenses.

4. Helps in Accurate Estimation of Tax Liability

Advance tax encourages taxpayers to regularly evaluate their income and tax position during the financial year. Taxpayers must estimate income from salary, business, profession, capital gains, house property, and other sources before calculating tax liability. This process helps identify possible tax obligations in advance and allows taxpayers to make appropriate financial decisions. Regular estimation also helps in adjusting investments, claiming eligible deductions, and selecting suitable tax-saving options. Thus, advance tax supports better tax planning by promoting continuous review of financial activities.

5. Enables Effective Tax-Saving Planning

Advance tax provides taxpayers an opportunity to review their financial position and make suitable tax-saving investments before the end of the financial year. By estimating tax liability in advance, taxpayers can identify available deductions, exemptions, and rebates under the Income-tax Act. They can invest in eligible instruments, plan expenses, and structure their income efficiently to reduce taxable income legally. Advance tax planning ensures that taxpayers utilize available benefits properly and avoid last-minute decisions that may not provide maximum tax advantages.

6. Reduces Financial Burden at Year End

A major benefit of advance tax planning is that it reduces the burden of paying a large amount of tax after the completion of the financial year. Instead of arranging a significant sum at once, taxpayers pay smaller amounts during the year. This approach improves financial stability and helps individuals and organizations manage their budgets effectively. Businesses can incorporate advance tax payments into their financial planning and avoid disruption of working capital. Therefore, advance tax contributes to smooth financial management and reduces year-end financial stress.

7. Improves Compliance with Tax Laws

Advance tax plays a significant role in promoting compliance with income tax provisions. Taxpayers who regularly calculate and pay advance tax are more likely to maintain proper financial records and follow statutory requirements. Timely payment reduces the risk of notices, penalties, and interest charges from tax authorities. It also reflects responsible tax behavior and strengthens the relationship between taxpayers and the Government. Advance tax planning ensures that taxpayers fulfill their obligations while avoiding non-compliance issues.

8. Supports Business Financial Planning

For businesses and professionals, advance tax is an essential part of financial planning. Companies must estimate profits, expenses, deductions, and tax liabilities throughout the year to determine advance tax payments. Proper planning allows businesses to allocate resources efficiently and include tax obligations in their financial forecasts. It also helps management make better decisions regarding investments, expansion, and expenditure. By integrating advance tax into business planning, organizations can improve financial control and maintain compliance with tax regulations.

9. Helps Avoid Last-Minute Tax Decisions

Advance tax planning reduces dependence on last-minute tax calculations and payments. When taxpayers review their income and tax liability periodically, they can make informed decisions regarding investments, deductions, and financial transactions. This prevents errors, incorrect calculations, and unnecessary tax payments. Early planning provides sufficient time to collect documents, evaluate tax-saving opportunities, and ensure accurate compliance. Therefore, advance tax encourages a proactive approach rather than a reactive approach to taxation.

10. Strengthens Overall Tax Management

Advance tax is an important component of effective tax management. It allows taxpayers to organize their income, investments, deductions, and tax payments in a planned manner. By ensuring timely payment, reducing interest liability, improving cash flow management, and encouraging compliance, advance tax contributes to efficient financial planning. It benefits both taxpayers and the Government by creating a predictable system of tax collection. Thus, advance tax serves as a valuable tool for individuals, businesses, and professionals to manage their tax obligations effectively and efficiently.

Exemptions from Advance Tax

1. Senior Citizens Without Business or Professional Income

One of the important exemptions from advance tax is available to senior citizens who do not have income from business or profession. A resident individual who has completed the prescribed age limit for senior citizenship and earns income only from sources such as pension, interest, rental income, or investments is not required to pay advance tax. This exemption provides relief to elderly taxpayers who may have limited and fixed sources of income. However, if a senior citizen is engaged in any business or profession and their tax liability exceeds the prescribed limit, they become liable to pay advance tax. The exemption recognizes the difficulties faced by senior citizens in estimating income and managing periodic tax payments.

2. Tax Liability Less Than ₹10,000

Taxpayers whose total tax liability for the financial year is less than ₹10,000 after considering TDS, TCS, and other available tax credits are exempt from paying advance tax. The Income-tax Act provides this threshold to avoid unnecessary compliance for taxpayers with small tax obligations. If the remaining tax payable after deducting TDS and other credits is below ₹10,000, the taxpayer does not need to pay advance tax instalments. This exemption simplifies tax compliance and reduces the administrative burden on both taxpayers and tax authorities. However, taxpayers must calculate their estimated tax liability accurately to determine whether the threshold limit is crossed.

3. Salaried Employees with Sufficient TDS Deduction

Individuals earning salary income are generally exempt from paying advance tax if their employer has deducted sufficient Tax Deducted at Source (TDS) from their salary. Since employers calculate salary tax liability and deduct tax every month under salary TDS provisions, employees usually do not have to make separate advance tax payments. However, if a salaried employee has additional income from sources such as capital gains, rental income, interest, business income, or investments and the TDS deducted is insufficient, the individual may become liable to pay advance tax. Therefore, the exemption depends on whether the total tax liability is already covered through TDS.

4. Individuals Having Complete TDS Coverage

A taxpayer is not required to pay advance tax when the entire tax liability is already covered through TDS or TCS deductions. For example, if a taxpayer earns interest income, commission income, or professional income where adequate TDS has been deducted, no additional advance tax may be payable. The purpose of advance tax is to collect the remaining tax liability that has not been covered through other tax collection mechanisms. Therefore, taxpayers should consider all available TDS and TCS credits before calculating their advance tax obligation.

5. Taxpayers Covered Under Small Income Categories

Taxpayers with low taxable income who do not cross the minimum tax liability threshold are exempt from advance tax payment. If their total income falls within the basic exemption limit or their final tax liability after deductions and rebates is below ₹10,000, they do not need to pay advance tax. This exemption reduces compliance requirements for small taxpayers and ensures that advance tax provisions focus mainly on persons with significant tax liabilities. It provides convenience to individuals with limited income sources.

6. Senior Citizens Earning Only Investment Income

Resident senior citizens who earn income only from investments such as bank deposits, dividends, pension, or rental income may receive exemption from advance tax if they do not have business or professional income. Although such income may be taxable, the law provides relief by removing the requirement of periodic advance tax payments. The taxpayer may discharge the remaining tax liability while filing the Income-tax Return through self-assessment tax, if applicable. This provision simplifies tax compliance for senior citizens who generally depend on regular investment income.

7. Taxpayers Paying Tax Through TDS on Non-Salary Income

Taxpayers receiving income where tax is already deducted at source may not be required to pay advance tax if the deducted amount covers their entire tax liability. For example, interest income, commission, professional fees, and certain other payments may have TDS deductions. If the TDS amount is sufficient to cover the final tax liability, there is no further advance tax obligation. However, taxpayers must verify their TDS credits through Form 26AS or the Annual Information Statement (AIS) before deciding whether advance tax payment is required.

8. Persons Having No Taxable Income

Individuals or entities whose total income does not result in any tax liability are completely exempt from advance tax payment. If income is below the taxable limit or available deductions and exemptions reduce the tax liability to zero, no advance tax is payable. Such persons are not required to comply with advance tax instalment provisions. This exemption ensures that taxpayers with no actual tax burden are not required to make unnecessary payments during the financial year.

9. Taxpayers with Irregular Income Below the Threshold

Persons earning occasional or irregular income are exempt from advance tax if the resulting tax liability does not exceed the prescribed limit. For example, a taxpayer receiving small amounts of capital gains, interest income, or other occasional receipts may not need to pay advance tax if the total tax payable remains below ₹10,000. This provision provides flexibility to taxpayers whose income patterns are uncertain or limited and prevents unnecessary advance payment obligations.

Adjustments and Refunds under Income Tax

Tax adjustment refers to the process of setting off excess tax paid, available tax credits, or previous tax liabilities against the current tax liability of a taxpayer. Adjustments ensure that taxpayers pay only the correct amount of tax after considering advance tax payments, TDS, TCS, self-assessment tax, and other eligible credits. The Income Tax Department automatically considers available credits while processing Income-tax Returns. If the taxpayer has paid more tax than the actual liability, the excess amount may be adjusted against outstanding tax demands or refunded to the taxpayer. Tax adjustments help maintain accuracy and prevent unnecessary tax payments.

An income tax refund arises when a taxpayer has paid more tax than the actual tax liability for a financial year. The excess payment may occur due to higher TDS deduction, excess advance tax payment, excess self-assessment tax payment, or incorrect estimation of income. After processing the Income-tax Return, if the tax paid exceeds the final liability, the Income Tax Department issues a refund to the taxpayer. Refunds ensure fairness by returning excess tax collected from taxpayers.

1. Adjustment of Advance Tax and TDS Credits

One of the most common adjustments in income tax is the adjustment of advance tax and TDS credits against the final tax liability. During the financial year, taxpayers may pay advance tax or have tax deducted at source by employers, banks, companies, or other deductors. While filing the Income-tax Return, these payments are adjusted against the total tax payable. If the total tax already paid is equal to the tax liability, no further payment is required. If excess tax has been paid, the taxpayer may become eligible for a refund.

2. Adjustment of Tax Demand

When the Income Tax Department identifies unpaid tax liability after processing a return, it may raise a tax demand. Any available refund due to the taxpayer can be adjusted against such outstanding demand. Before making the adjustment, the taxpayer is generally informed about the outstanding liability and given an opportunity to respond. This mechanism allows the Government to recover pending dues while ensuring that taxpayers receive only the net amount payable after considering existing liabilities.

3. Situations Leading to Tax Refund

Tax refunds may arise in various situations, including:

• Excess deduction of TDS by the employer or deductor.
• Payment of advance tax exceeding the actual tax liability.
• Excess payment of self-assessment tax.
• Claiming eligible deductions or exemptions during return filing.
• Changes in tax liability after assessment.
• Double payment of tax due to errors.

Taxpayers should accurately file their Income-tax Returns and verify tax credits to claim refunds correctly.

4. Procedure for Claiming Refund

A taxpayer can claim a refund by filing an accurate Income-tax Return within the prescribed time limit. The taxpayer must provide correct bank account details for receiving the refund electronically. The Income Tax Department processes the return, verifies tax payments, and determines whether a refund is payable. After successful verification and processing, the refund amount is credited directly to the taxpayer’s bank account. Timely filing and accurate information help ensure faster refund processing.

5. Refund Adjustment Against Outstanding Demand

If a taxpayer has any outstanding tax demand from previous years, the Income Tax Department may adjust the refund amount against such demand. This adjustment is made according to the provisions of the Income-tax Act. The taxpayer is informed about the proposed adjustment and may submit a response if the demand is incorrect. If the demand is valid, the refund is reduced by the outstanding amount, and only the remaining balance is paid to the taxpayer.

6. Interest on Income Tax Refund

In certain cases, taxpayers may be entitled to receive interest along with their refund amount. Interest is generally calculated from the date prescribed under the Income-tax Act until the date of refund payment. The purpose of refund interest is to compensate taxpayers for the delay in receiving excess tax paid. However, eligibility and calculation of refund interest depend on specific conditions provided under the Income-tax Act.

7. Verification and Processing of Refund

Before issuing a refund, the Income Tax Department verifies the taxpayer’s Income-tax Return, tax payments, TDS details, and other available information. Refund processing is generally performed electronically through the income tax e-filing system. Taxpayers can track refund status online after filing and verification of their returns. Proper reporting of income, correct bank details, and accurate tax credit information help avoid delays in refund processing.

Calculation of Advance Tax

The calculation of advance tax is based on the estimated income for the year. Taxpayers must estimate their annual income, apply the applicable tax rates, and adjust for TDS or any tax credits available. The resulting tax liability, if ₹10,000 or more, should be paid in installments as specified by the income tax department. It’s essential to estimate income as accurately as possible to avoid underpayment or overpayment of tax.

Payment Schedules

For Individuals and Corporate Taxpayers:

• 15th June: At least 15% of the advance tax liability.
• 15th September: At least 45% of the advance tax liability, minus the amount already paid in the first installment.
• 15th December: At least 75% of the advance tax liability, minus the amount already paid in the first and second installments.
• 15th March: 100% of the advance tax liability, minus the amount already paid in the previous installments.

For taxpayers who opted for the presumptive taxation scheme under Section 44AD or 44ADA, the entire advance tax liability is to be paid on or before the 15th of March of the financial year.

Compliance and Penalties

Failure to pay advance tax or underpayment of advance tax attracts interest under Sections 234B and 234C of the Income Tax Act. Section 234B deals with interest for default in payment of advance tax, while Section 234C addresses interest for deferment of advance tax. It’s crucial for taxpayers to make timely and accurate payments to avoid these penalties.