CMA Intermediate · Direct and Indirect Taxation

Advance Tax: formula sheet

Full chapter guide

Key formulas

Meaning of advance tax: Advance tax = tax on current-year estimated income, paid in instalments during the same tax year; This is the pay-as-you-earn principle. The tax year is the year in which the income is earned.
Net tax tested against the threshold: Estimated tax payable = Tax on estimated total income (after rebate and relief) − TDS − TCS; Use only TDS and TCS that will be deducted or collected on income included in your total income.
Liability test: Liable if estimated tax payable ≥ ₹10,000; Exactly ₹10,000 means liable. ₹9,999 means not liable.
Senior citizen exemption: Exempt if: resident individual + aged 60 or more at any time in the tax year + no business or profession income; All three conditions must be met. Failing any one makes the person liable, if the ₹10,000 test is also met.
Who is covered: Every person (individual, HUF, firm, company and others) whose estimated tax is ₹10,000 or more; The liability is not limited to businesses. Salaried persons with other income can be liable too.
Advance tax payable: Advance tax payable = Estimated tax on current-year total income (including surcharge and cess) − TDS − TCS; TDS and TCS are those expected to be deducted or collected on income and transactions of the same tax year.
Liability threshold: Advance tax is payable only if the balance after TDS and TCS ≥ ₹10,000; If the balance is below ₹10,000, no advance tax is due. Exactly ₹10,000 is payable.
Cess: Health and education cess = 4% × (income-tax + surcharge); Add it before deducting TDS and TCS.
Instalments for most assessees (cumulative): By 15 June: 15% | by 15 September: 45% | by 15 December: 75% | by 15 March: 100%; Percentages are of the advance tax payable and are cumulative. The amount of each instalment is the difference from the previous cumulative figure.
Presumptive business assessees: Whole advance tax in one instalment on or before 15 March; This is for those who opt for the presumptive scheme for business. Check the instalment topic for the exact persons covered.
Individual new-regime slabs used in the examples: Up to ₹4,00,000: nil | ₹4,00,001–8,00,000: 5% | ₹8,00,001–12,00,000: 10% | ₹12,00,001–16,00,000: 15% | ₹16,00,001–20,00,000: 20% | ₹20,00,001–24,00,000: 25% | above ₹24,00,000: 30%; In the exam, use the rates given in the question or the rates in your tax-year 2026-27 material.
Instalment schedule (section 408(1)): 15 June: ≥ 15% | 15 September: ≥ 45% | 15 December: ≥ 75% | 15 March: 100%; Percentages are cumulative, applied to the advance tax payable.
Amount of each instalment: Instalment = Cumulative % × Advance tax − Advance tax already paid; For the 15 March instalment the cumulative % is 100%.
Presumptive taxation rule (section 408(2)): Whole advance tax on or before 15 March; Applies to an assessee declaring profits under section 58(2), Table Sl. No. 1 or 3.
Payment by 31 March (section 408(3)): Paid on or before 31 March = advance tax of that financial year; Treated as advance tax for all purposes of the Act.
Advance tax payable: Tax on estimated total income − TDS/TCS expected to be credited; Advance tax is payable if this balance is ₹10,000 or more. Check the threshold and the exemption for resident senior citizens without business income in your Section 408 notes.
Cumulative instalments (non-presumptive assessee): By 15 June: 15% | By 15 September: 45% | By 15 December: 75% | By 15 March: 100%; These percentages are cumulative, not separate. Each is a percentage of the advance tax payable for the year.
Revised estimate: Revised cumulative % × revised advance tax − amount already paid = payment due now; Apply the percentage of the next due date to the new figure. Do not wait for the year end.
Capital gains / casual income arising after an instalment date: Tax on that income is included in the cumulative amount due at the next instalment date on or after it arises, and stays in the cumulative total after that; It is paid once, as part of the cumulative amount. If it arises after 15 March, pay the whole tax on it by 31 March.
Default interest (shortfall of advance tax): Interest = 1% × number of months (part of a month = full month) × (Assessed tax − Advance tax paid); Applies only if advance tax paid is less than 90% of assessed tax. Round the shortfall down to the nearest ₹100. Simple interest.
Assessed tax: Assessed tax = Tax on total income − TDS/TCS and other credits allowed; This is the base for the 90% test. Advance tax paid is not deducted when finding assessed tax.
Period for default interest: From 1 April after the tax year to the date the total income is determined (or, in a sum, to the month of paying the balance tax); Self-assessment tax paid reduces the shortfall from the month of payment. Count April as the first month.
Instalments: companies: 15% by 15 June; 45% by 15 Sept; 75% by 15 Dec; 100% by 15 March; Cumulative percentages of advance tax due.
Instalments: other assessees: 30% by 15 Sept; 60% by 15 Dec; 100% by 15 March; No June instalment. Presumptive-taxation assessees pay the whole amount by 15 March.
Deferment interest: Interest = 1% × months × shortfall in the instalment; Months: 3 for the shortfall of each instalment due in June, September and December, as applicable to the assessee type (a company has all three; other assessees have only September and December); 1 month for the March shortfall.
No deferment interest on early shortfall: Company: ≥ 12% paid by 15 June and ≥ 36% by 15 Sept. Other assessees: ≥ 27% paid by 15 Sept; Percentages are of tax due on the returned income. There is no such relief for the December instalment. The March instalment must reach 100%.

Quick revision

Advance tax is payable when estimated tax, after TDS and TCS, is ₹10,000 or more in the tax year.
A resident senior citizen with no business income is not required to pay advance tax.
Advance tax is paid on current-year estimated income, not on last year's income.
Net tax for advance tax = total tax with surcharge and cess minus TDS and TCS.
Normal instalments are cumulative: 15% by 15 June, 45% by 15 September, 75% by 15 December and 100% by 15 March.
A presumptive taxpayer pays the whole amount in one instalment by 15 March.
Advance tax paid by 31 March is treated as advance tax paid for that tax year.
Interest for deferment on a June, September or December instalment shortfall is charged at 1% per month for 3 months.
Interest on a March shortfall is charged at 1% per month for 1 month.
Interest is simple interest, and a part of a month counts as a full month.
Interest for deferment is not charged if the shortfall arises from income, such as capital gains, that could not be foreseen and tax is paid in the remaining instalments.
Always check whether the question asks for the instalment, the shortfall or the interest.

Common mistakes

Testing the ₹10,000 limit against total tax without subtracting TDS and TCS. Fix: Always write the line: Tax − TDS − TCS = net tax. Compare only the net figure with ₹10,000.
Treating a person with net tax of exactly ₹10,000 as not liable. Fix: The rule is ₹10,000 or more. Exactly ₹10,000 makes the person liable.
Deducting TDS and TCS before adding cess, or forgetting cess altogether. Fix: Always follow the order: tax, rebate, surcharge, cess, then subtract TDS and TCS.
Paying advance tax when the balance is below ₹10,000. Fix: Test the ₹10,000 limit on the balance after subtracting TDS and TCS.
Treating the percentages as separate amounts of 15%, 45%, 75% and 100% each. Fix: Remember they are cumulative. Total paid by each date must reach that percentage. The fresh payment is the difference.
Saying companies and non-companies have different due dates under section 408. Fix: Section 408(1) applies one table to all assessees liable to pay advance tax, other than those in sub-section (2). The split is presumptive versus others, not company versus non-company.
Treating 15%, 45%, 75% and 100% as separate amounts of each instalment Fix: Remember they are cumulative. The September payment is 30% of the year's tax (45% − 15%), if June was paid in full.
Spreading the tax on capital gains over all four instalments Fix: Include it only from the first instalment date on or after the date the gain arose. A gain arising in November is included in the cumulative amount due by 15 December. It stays in the 15 March total and is paid once.
Charging default interest on the whole assessed tax instead of the shortfall. Fix: Once the 90% test fails, interest is on assessed tax minus advance tax paid, not on the full tax.
Using advance tax paid to reduce assessed tax before the 90% test. Fix: Only TDS, TCS and similar credits reduce assessed tax. Advance tax is the amount you compare with it.

Exam tips

In MCQs, the trap is nearly always one of three things: TDS not subtracted, exactly ₹10,000, or a senior citizen with business income. Check all three before answering.
In a written answer, state the rule in one line first (net tax of ₹10,000 or more), then show the subtraction. Examiners give step marks for the formula and for the conclusion.
Look for hints in the question: 'resident', 'aged 62', 'pension and interest only'. These signal the exemption. 'Non-resident' or 'professional fees' signals the opposite.
If a question asks for the advance tax payable, first prove liability with the ₹10,000 test, then compute instalments. Skipping the test can lose marks.
Use the terms 'tax year' and the Income-tax Act, 2025 throughout. Do not write 'assessment year'.
Always draw the final statement: tax, cess, TDS, TCS, balance, and the ₹10,000 test. Markers look for each line.
Write the instalments as cumulative percentages and show the difference. Show the total check at the end.
If the question says the assessee is a senior citizen, check for business income before saying no advance tax is due.