# Section 208 - Obligation to Pay Advance Tax

## Trigger for Advance Tax

Obligation to pay advance tax arises in every case where advance tax payable is ₹10,000 or more.

## Consequence of Not Triggering Section 208

Assessee with advance tax liability < ₹10,000:

NOT liable under Section 234B (interest for default in payment)
NOT liable under Section 234C (interest for deferment of instalments)
STILL liable under Section 234A (interest for belated filing of return)

## Exemption from Advance Tax — Senior Citizens

Resident Senior Citizens (age 60 or more) who:

Have passive income (interest, rent, etc.)
Do NOT have PGBP income

Are exempt from payment of advance tax.

## How to Calculate Advance Tax Liability

```

Estimated Total Income xxx

Tax Calculation xxx

Less: TDS/TCS** (xxx)

Less: Relief u/s 89 (xxx)

Less: MAT/AMT credit (xxx)

Less: Relief u/s 90/90A/91 (xxx)

------------------------------

Advance Tax Liability xxx

```

TDS/TCS Adjustment Rule:

TDS/TCS can be reduced only if actually deducted/collected
TDS/TCS deductible/collectible but not actually deducted/collected → CANNOT be reduced

## Due Dates and Instalments

Due Date	Cumulative Amount Payable
On or before 15th June	≥ 15% of advance tax liability
On or before 15th September	≥ 45% of advance tax liability
On or before 15th December	≥ 75% of advance tax liability
On or before 15th March	≥ 100% of advance tax liability

Important: Any amount paid on or before 31st March shall be considered as advance tax paid during the financial year.

Worked example

### Example 1

Example: Mr. X has estimated total tax liability of ₹50,000. TDS deducted is ₹42,000. Is advance tax required?

Answer: Net advance tax = ₹50,000 - ₹42,000 = ₹8,000 (< ₹10,000). No advance tax obligation. Section 234B/234C not applicable. But Section 234A could still apply if return is filed late.

### Example 2

Example: Mr. Y (age 65) is a resident senior citizen earning ₹15 lakhs rental income and ₹3 lakhs interest. No business income. Is advance tax required?

Answer: No. Resident senior citizen with no PGBP income is exempt from advance tax, regardless of liability amount.

### Example 3

Example: Mr. Z's total advance tax liability is ₹1,00,000. He paid ₹10,000 on 15th June. What is the shortfall for first instalment?

Answer: Required by 15th June = 15% × ₹1,00,000 = ₹15,000. Paid = ₹10,000. Shortfall = ₹5,000. Interest u/s 234C will apply on this shortfall.

⚠️ Common exam mistakes

Reducing 'TDS deductible' (not actually deducted) while computing advance tax liability — only actually deducted TDS reduces liability
Assuming senior citizen exemption applies even if they have PGBP income — exemption requires NO PGBP income
Forgetting 234A still applies even when 234B/234C don't (for sub-₹10,000 liability)
Misreading instalment percentages as separate vs cumulative — 45% by Sept is CUMULATIVE total

Reference: 208 — Income Tax Act, 1961

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