# Section 208 — Obligation to Pay Advance Tax

## Threshold

An assessee is liable to pay advance tax in every case where the advance tax payable is ₹10,000 or more during the financial year.

## Consequence of Low Tax Liability

If the advance tax liability is less than ₹10,000:

No liability under Section 234B (default in payment of advance tax)
No liability under Section 234C (deferment of advance tax instalments)
However, interest under Section 234A (for belated filing of return) continues to apply if return is filed late.

## Exemption from Advance Tax — Senior Citizens

A Resident Senior Citizen (age 60 or more) is exempt from payment of advance tax if:

1. He has only passive income (interest, rent, etc.), AND

2. He does NOT have PGBP income (no income under the head Profits and Gains of Business or Profession).

## Formula — Calculation of Advance Tax Liability

Item	Amount
Estimated Total Income	xxx
Tax on above	xx
Less: TDS/TCS**	(xx)
Less: Relief u/s 89	(xx)
Less: MAT/AMT credit	(xx)
Less: Relief u/s 90 / 90A / 91	(xx)
Advance Tax Liability	xx

### Important Note on TDS/TCS Reduction

TDS/TCS can be reduced while computing advance tax liability only if it has been actually deducted/collected. TDS/TCS that was deductible/collectible but not actually deducted/collected cannot be reduced.

Worked example

### Example 1

Q: Mrs. R, aged 65, resident, has interest income of ₹6,00,000 and pension of ₹4,00,000. She has no business income. Is she liable to pay advance tax?

Solution: She is a resident senior citizen, has no PGBP income, and earns only passive income. Hence she is exempt from advance tax — she may pay self-assessment tax at the time of filing return.

### Example 2

Q: Mr. A's estimated tax = ₹1,20,000. TDS actually deducted = ₹40,000. TDS deductible but not deducted by another payer = ₹15,000. Compute advance tax.

Solution: Only TDS actually deducted (₹40,000) is reducible. TDS not actually deducted cannot be reduced.

Advance Tax = ₹1,20,000 − ₹40,000 = ₹80,000.

⚠️ Common exam mistakes

Treating a Non-Resident senior citizen as exempt — exemption only for Resident senior citizens.
Forgetting that even if having no business income, mere fact of crossing 60 years does not give exemption if assessee has PGBP income.
Reducing TDS deductible (but not deducted) from total tax to compute advance tax — only actually deducted TDS can be reduced.
Concluding that no 234A interest is attracted when advance tax liability < ₹10,000 — 234A still applies on belated return.

Bare-Act text Section 208 · Income-tax Act, 1961 · click to expand

Advance tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee during that year, as computed in accordance with the provisions of this Chapter, is ten thousand rupees or more.

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Liability to pay Advance Tax (Section 208) and Exemption

Worked example

⚠️ Common exam mistakes