Section 210: The Rule That Makes Advance Tax Payment Compulsory

Paying taxes is a responsibility that every earning individual or business must fulfill. While most salaried employees rely on TDS deducted by their employers, others with additional income—like freelancers, professionals, or business owners—are expected to pay taxes themselves. To prevent last-minute tax payment stress, the Income Tax Act introduces the concept of Advance Tax, governed under Section 210.

In simple terms, advance tax is nothing but paying your taxes in advance throughout the year instead of waiting until the end of the financial year. Section 210 lays down the framework for calculating & paying this tax, who needs to pay it, and the consequences of non-compliance.

What is Section 210 of the Income Tax Act?

Section 210 of the Income Tax Act, 1961 deals with the payment of advance tax by taxpayers. If your estimated total tax liability for a financial year is ₹10,000 or more, you are required to pay advance tax in prescribed installments.

This provision ensures that the government receives tax revenue regularly instead of waiting for annual tax filings. It applies to:

• Salaried individuals with additional sources of income (like rent, capital gains, or FD interest).
• Self-employed professionals such as doctors, lawyers, & freelancers.
• Business owners.

Applicability of Advance Tax Under Section 210

Advance tax applies if:

1. Your estimated tax liability exceeds ₹10,000 after considering TDS.
2. You have income from business, profession, or other sources beyond salary.
3. You are not covered under presumptive taxation schemes (though such taxpayers also pay in a single installment under Section 44AD/44ADA).

For salaried individuals, if your employer deducts sufficient TDS, you may not need to pay advance tax separately. But if you earn rental income, capital gains, or large interest income, Section 210 makes it mandatory.

Also Read: Interest on Default in Advance Tax Instalments

Due Dates for Advance Tax Payment

The law specifies clear deadlines for advance tax payments.

• On or before 15th June – 15% of the total estimated tax.
• On or before 15th September – 45% of the total estimated tax (cumulative).
• On or before 15th December – 75% of the total estimated tax (cumulative).
• On or before 15th March – 100% of the total estimated tax.

For taxpayers under presumptive income schemes (Sections 44AD & 44ADA), the entire advance tax has to be paid in one installment by 15th March.

Calculation of Advance Tax

To compute advance tax liability under Section 210:

1. Estimate your total income for the financial year (salary rent interest business/professional income capital gains).
2. Subtract deductions under Chapter VI-A (Sections 80C, 80D, etc.).
3. Apply the applicable income tax slab rates.
4. Reduce TDS already deducted.
5. If the balance tax liability is more than ₹10,000, pay advance tax as per the schedule.

Example:
If your estimated income is ₹12 lakh, with deductions of ₹1.5 lakh under Section 80C, your taxable income is ₹10.5 lakh. Based on slab rates, your tax liability might come to around ₹1.2 lakh. After adjusting TDS of ₹90,000 already deducted by your employer, the balance ₹30,000 becomes payable as advance tax.

Exemptions from Advance Tax

Advance tax is not applicable in the following cases:

• Senior citizens (aged 60 or above) with no income from business or profession."
• Taxpayers whose total tax liability (after TDS) is less than ₹10,000.

This exemption ensures that retirees & small taxpayers do not face unnecessary compliance burden.

Penalty for Non-Payment or Late Payment

Failure to comply with Section 210 can attract penalties and interest under Sections 234B & 234C of the Income Tax Act.

• Section 234B – Interest for non-payment or shortfall in advance tax.
• Section 234C – Interest for delay in installment payments.

This makes it crucial to estimate income accurately & pay taxes on time.

Also Read: Interest on Delay in Advance Tax Payments

Section 210 and Businesses

For businesses, especially SMEs & startups, advance tax ensures discipline in managing finances. Since business income is unpredictable, entrepreneurs often under-estimate liability. Section 210 requires careful quarterly planning, helping businesses avoid heavy penalties at year-end.

Section 210 vs Self-Assessment Tax

Advance tax (Section 210) should not be confused with self-assessment tax.

• Advance tax – Paid during the financial year in installments.
• Self-assessment tax – Paid after the end of the year while filing ITR, for any remaining balance tax liability.

Both are crucial for compliance, but advance tax minimizes last-minute financial stress.

Common Mistakes Taxpayers Make

1. Ignoring other income sources like FD interest or capital gains.
2. Delaying payments till March, leading to interest penalties.
3. Relying only on employer’s TDS, without considering extra income."
4. Incorrect estimation of deductions, resulting in underpayment.

Avoiding these mistakes ensures smooth compliance under Section 210.

Digital Payment of Advance Tax

Today, paying advance tax is simpler with online modes:

• Through the TIN-NSDL portal or Income Tax e-filing portal.
• Net banking or debit card facility available.
• Instant challan generation for proof of payment.

This shift to digital platforms has made compliance faster & more transparent.

Also Read: Why Paying Self-Assessment Tax is Non-Negotiable

Why Section 210 Matters

Section 210 ensures:

• Regular inflow of revenue for the government.
• Reduced burden on taxpayers at year-end.
• Discipline in tax compliance.

For taxpayers, it’s not just about legal compliance, but also about better financial planning.

Final Thoughts

Section 210 of the Income Tax Act is one of the most important provisions for taxpayers whose income exceeds the basic exemption threshold & involves multiple income sources. It mandates advance tax payment in installments to avoid last-minute burden and penalties. Whether you are a salaried person with side income, a freelancer, or a business owner, understanding this section ensures stress-free tax compliance.

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