Advance tax is the government's way of saying: don't wait till March 31st to pay your entire year's tax — pay it in instalments as you earn. Think of it like an EMI for your tax bill. Section 207 answers the very first question in this process — who is actually required to pay advance tax?
The rule is simple: if your estimated tax liability for the year (after deducting TDS already cut by your employer or bank) exceeds ₹10,000, you are liable to pay advance tax. That ₹10,000 is the trigger. Below it, you're off the hook — just pay the full tax before filing your return and it's called self-assessment tax instead. Above ₹10,000, you must follow the advance tax instalment schedule under Section 211.
Now here's the important exception that the exam loves: Senior citizens are exempt from advance tax — but only if both conditions are met: (a) the person is a resident individual aged 60 years or more at any time during the financial year, AND (b) they do not have any income from business or profession. So a retired Mr. Mehta, 65, earning only pension and rent? No advance tax. But if Mr. Mehta runs a small consulting practice on the side — even one client — he loses this exemption entirely and must pay advance tax like everyone else. Non-resident senior citizens also don't get this exemption; it's only for residents.
Why does this matter practically? Because if you're liable but don't pay advance tax (or underpay), Section 234B and 234C will charge you simple interest at 1% per month as a penalty. So Section 207 is the gateway — get the liability determination wrong, and you're walking into an interest trap. This is asked frequently as a 2-4 mark theory/scenario question — especially the senior citizen exception with a twist like 'what if they have rental income?' (Answer: still exempt — rental is not business income).