Sections 403 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Sections 403 to 406 open Part C of Chapter XIX, the part on advance payment of tax. They say who is liable to pay advance tax, the amount of tax at which the liability begins, how the amount is worked out with a formula, and how a person pays on his own accord by estimating his current income. This article follows the text as per the Income-tax Act, 2025 as amended by the Finance Act, 2026. To estimate your own figure, use our advance tax calculation support.
Advance tax is payable during a financial year on the current income of the assessee (section 403), where the advance tax payable is Rs. 10,000 or more (section 404). A resident individual aged sixty years or more with no business or professional income is outside the liability (section 403(3)). The amount is A = B – C: tax on the specified sum less tax deductible or collectible at source (section 405). Each person pays on his own accord on his own estimate, and may revise the estimate in later instalments (section 406).
Section 403: liability for advance tax
| Sub-section | What it says |
|---|---|
| (1) | Advance tax is payable during any financial year in respect of the current income of the assessee, as per the provisions of this Part |
| (2) | "Current income" of a tax year means the total income of the assessee which would be chargeable to tax for that tax year |
| (3) | Sub-section (1) does not apply to an individual resident in India who (a) has no income chargeable under the head "Profits and gains of business or profession"; and (b) is of the age of sixty years or more at any time during the tax year |
Both conditions in sub-section (3) must hold. A senior citizen with business income is still within the liability, and a resident individual below sixty with only salary or interest income is also within it. The Act says "at any time during the tax year", so reaching sixty during the tax year is enough for the age condition.
Example (facts assumed). Mr. Iyer is a resident individual aged sixty-two during the tax year. He has pension and interest income and no income from business or profession. Section 403(3) takes him out of the liability. His neighbour Mr. Nair is also sixty-two but runs a small shop; the first condition fails for Mr. Nair, so section 403(1) applies to him.
For the instalment dates, see our post on section 408; this article does not restate them.
Section 404: the threshold
Advance tax is payable by the assessee during a financial year "where the amount of such tax payable during that year, as computed under this Part, is Rs. 10,000 or more". Two points follow.
- The test is on the tax payable as computed under this Part, that is, the result of the formula in section 405, not on the gross tax.
- The figure of Rs. 10,000 is a floor for liability. The Act says "or more", so exactly Rs. 10,000 attracts the liability.
Example (amounts assumed). Computation under section 405 gives advance tax of Rs. 9,500 for Ms. Fernandes. As it is below Rs. 10,000, section 404 does not make her liable. If it had come to Rs. 10,000, she would be liable.
Section 405: computation of advance tax
Section 405(1) says the advance tax payable by an assessee under section 404, on his own accord under section 406, or in pursuance of an order of an Assessing Officer under section 407, is computed as:
A = B – C
| Symbol | Meaning |
|---|---|
| A | The amount of advance tax payable in a financial year |
| B | Income-tax on the "specified sum", calculated at the rates in force in the financial year. "Specified sum" has the meaning given in section 406 or section 407 |
| C | The income-tax that would be deductible or collectible at source during the financial year under any provision of the Act from any income, subject to the two conditions below |
The conditions for C:
- the income is computed before allowing any deduction admissible under the Act and has been taken into account in computing the specified sum; and
- (i) the person responsible for deducting tax has paid or credited the income after deduction of tax; or (ii) the person responsible for collecting tax has received or debited the income after collection of tax.
The "rates in force" are those fixed for the financial year; this article states no slab or rate.
Net agricultural income (sub-section (2))
For a class of assessees where the Finance Act of the relevant year provides that net agricultural income is taken into account for computing advance tax:
- for an order under section 407(1) and (4), the net agricultural income is the amount taken into account for charging tax on the specified sum, as mentioned in section 407(3) and (6); and
- in any other situation, it is the net agricultural income as estimated by the assessee for the tax year.
Whether net agricultural income applies to a class of assessee depends on the annual Finance Act and is not stated here.
Example (amounts assumed). Tulsi Traders, a firm, estimates that tax on its specified sum at the rates in force comes to Rs. 80,000 (B). Tax it expects to be deducted at source on its receipts, which meets both conditions for C, is Rs. 22,000. Then A = 80,000 – 22,000 = Rs. 58,000. As this is above Rs. 10,000, it is liable under section 404.
Section 406: payment on your own accord
| Sub-section | What it says |
|---|---|
| (1) | Every person liable to pay advance tax under section 404 (whether or not he has been previously assessed by way of regular assessment) shall, on his own accord, pay advance tax on the specified sum, calculated in the manner laid down in section 405, at the appropriate percentage, on or before the due date of each instalment specified in section 408 |
| (2) | A person who pays any instalment or instalments under sub-section (1) may increase or reduce the advance tax payable in the remaining instalment or instalments to accord with the specified sum and the advance tax payable on it, and pay accordingly |
| (3) | For this section, "specified sum" means current income as estimated by the assessee |
Three observations on the text.
- The words "whether or not he has been previously assessed" mean that a new assessee, with no earlier assessment, is also covered by the duty.
- The specified sum is the assessee's own estimate. The Act does not tie it to a past year when the assessee pays on his own accord. A past-year figure is used when an Assessing Officer issues an order under section 407, covered in our article on sections 407, 409 and 410.
- "Appropriate percentage" is printed in the sub-section without a figure. The instalments and amounts are in the Table in section 408 and are not repeated here.
Example (amounts assumed). After paying the first two instalments on an estimate of Rs. 40,000 of advance tax, Parveen finds that her income is falling. She revises the estimate. Under sub-section (2) she may reduce the amounts payable in the remaining instalments so that the total accords with the revised advance tax. If income rises, she may increase them in the same way.
How the four sections fit together
- Section 403 asks whether you are in the liability at all (current income, with the senior-citizen exception).
- Section 405 computes the amount (A = B – C).
- Section 404 says that it applies only if that amount is Rs. 10,000 or more.
- Section 406 requires payment on your own estimate in the instalments of section 408, with liberty to revise.
The consequences of paying short are in the interest provisions; see our post on interest for advance tax default under section 424. For the whole Chapter see the Chapter XIX guide.
Need help with advance tax?
Working out the specified sum, the tax deductible at source and the instalments is easier with a tax adviser. Our advance tax calculation service prepares the estimate, tracks the instalments and revises them when income changes.
Key takeaways
- Advance tax is on current income, meaning the total income chargeable to tax for the tax year (section 403).
- A resident individual aged sixty or more with no business or professional income is outside the liability.
- Liability arises only where advance tax payable, as computed, is Rs. 10,000 or more (section 404).
- The formula is A = B – C; C takes in tax deductible or collectible at source if the conditions are met.
- Payment is on the assessee's own estimate and can be revised in remaining instalments (section 406).
- Rates are those in force for the financial year; the Act's instalment Table is in section 408.
Read next
- Sections 407, 409 and 410: advance tax on order of the Assessing Officer, default and credit
- Section 408: advance tax instalments and due dates
- Section 424: interest for advance tax default
- Section 411: when tax is payable and when an assessee is deemed in default
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.