Introduction

Advance tax is a crucial compliance requirement for businesses, professionals, and individuals with significant non-salary income. Rather than paying all tax at the end of the financial year, taxpayers must pay tax in instalments throughout the year based on estimated income.

This ensures steady revenue for the government and reduces year-end tax burden for taxpayers.

This guide explains the advance tax rules, instalment schedule, due dates, interest under Sections 208 to 211, and who is required to pay advance tax for FY 2022-23.

What Is Advance Tax?

Advance tax, also known as “pay-as-you-earn tax”, is income tax paid in instalments during the same financial year in which the income is earned.

It applies to all taxpayers with tax liability of ₹10,000 or more (after TDS credits).

✔ Individuals & Businesses Required to Pay Advance Tax:

• Proprietorship businesses

• Companies

• Freelancers & professionals

• Rental income earners

• Capital gains earners (with special rules)

• Individuals with interest, commission, or other income

❌ Exemption:

Resident senior citizens (60+) with no business income are exempt.

Advance Tax Instalment Schedule (FY 2022-23)

How to Compute Advance Tax

• 1. Estimate total income for the year

• 2. Deduct eligible expenses and deductions (80C, 80D, 80G etc.)

• 3. Compute income tax on estimated income

• 4. Reduce TDS already deducted

• 5.Pay remaining tax as per instalment schedule

Interest for Delay or Non-Payment (Sections 234A, 234B, 234C)

Section 234B – Default in payment of advance tax

• Interest @ 1% per month if less than 90% of tax is paid by year-end.

Section 234C – Delay in instalments

• Interest applies for missing or shortfall in instalments:

• 15% instalment shortfall → interest @1%

• 45% instalment shortfall → interest @1%

• 75% instalment shortfall → interest @1%

• 100% instalment shortfall → interest @1%

Section 234A – Late filing of return

• Applies separately if return is not filed on time.

Special Cases in Advance Tax

✔ Capital Gains / Lottery Income

Advance tax must be paid in the remaining instalments once the income arises.

✔ Business Income Fluctuation

Taxpayers can revise estimates in every instalment—no restriction.

✔ Presumptive Income Scheme

Taxpayers under 44AD/44ADA pay entire advance tax by 15th March.

Special Cases in Advance Tax

• Avoids interest under Sections 234B & 234C

• Prevents last-minute financial burden

• Ensures smooth tax planning

• Helps maintain clean compliance record

• Reduces risk of notices or scrutiny

Conclusion

Advance tax is a key compliance requirement for businesses and professionals earning taxable income beyond TDS coverage. Understanding instalment dates, tax computation, and interest implications helps avoid penalties and ensures smooth tax management throughout the year.

Bisways Consulting Group provides expert assistance in advance tax calculation, instalment planning, income tax projections, and quarterly compliance support for individuals, professionals, and businesses.