The notice charges me interest under s.234B for not paying advance tax. Before I argue about the computation, was I even liable to pay advance tax in the first place?
Two conditions have to be satisfied before any advance tax liability arises. Section 207(1) makes tax payable in advance during a financial year, in accordance with ss.208 to 219, in respect of the total income of the assessee which would be chargeable for the assessment year immediately following that financial year — that income being called the "current income"; and s.208 then says advance tax shall be payable during a financial year only in every case where the amount of such tax payable by the assessee during that year, computed in accordance with Chapter XVII-C, is ten thousand rupees or more.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2025-04-01, reported as Income-tax Act, 1961, ss.207(1) and 208, as printed on the departmental section pages stamped Year: 2025 and Year: 2024 (No. 1). It bears on section 207, section 207(1), section 208, section 209, section 234B, section 234C of the Income Tax Act 1961, in Assessment & Scrutiny, Demand, Recovery & Stay and How Tax Law Is Read matters.
Section 234B(1) charges interest only on an assessee 'who is liable to pay advance tax under section 208'. So the s.208 threshold is not a concession — it is a jurisdictional fact for the interest charge, and if the advance tax computed under s.209 comes to less than ten thousand rupees there is no advance tax liability and therefore nothing for s.234B or s.234C to bite on. Two things are constantly got wrong here. First, the ten thousand rupee test is applied to the advance tax as computed under the whole of Chapter XVII-C — that is, after the s.209(1)(d) reduction for tax deductible or collectible at source — and not to the gross tax on total income; a salaried assessee whose entire tax is covered by s.192 deduction has no advance tax liability at all. Second, s.207(1) fixes the base as the current income of the financial year, so the charge is on an estimate made prospectively, not on the assessed income determined years later; s.234B then bridges the gap by working on the assessed tax. Note also that s.207(1) is expressly 'in accordance with the provisions of sections 208 to 219 (both inclusive)', which is what makes the machinery sections — s.209 computation, s.210 payment, s.211 instalments, s.219 credit — conditions of the charge rather than administrative detail.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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Section 207 is headed 'Liability for payment of advance tax'. Sub-section (1) reads: 'Tax shall be payable in advance during any financial year, in accordance with the provisions of sections 208 to 219 (both inclusive), in respect of the total income of the assessee which would be chargeable to tax for the assessment year immediately following that financial year, such income being hereafter in this Chapter referred to as "current income".' Sub-section (2) disapplies sub-section (1) for a resident individual who has no income chargeable under the head 'Profits and gains of business or profession' and is sixty years of age or more at any time during the previous year. Section 208 is headed 'Conditions of liability to pay advance tax' and reads in full: '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.' Both sections sit in Chapter XVII, Part C, of the Income-tax Act, 1961.
Advance tax is payable during a financial year on the assessee's estimated current income for that year, but only where the advance tax so computed under Chapter XVII-C is ten thousand rupees or more. Section 207(1) supplies the charge and identifies the base; s.208 supplies the monetary condition on which the charge depends. The words 'as computed in accordance with the provisions of this Chapter' in s.208 mean the threshold is tested on the figure arrived at after the s.209 computation, including the s.209(1)(d) reduction for tax deductible or collectible at source, and not on the gross tax on total income.
Not applicable — this is a statement of the statutory text as printed on the departmental section pages. No judicial reasoning is involved.
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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Handle my notice → Ask a CA on WhatsAppTwo conditions have to be satisfied before any advance tax liability arises. Section 207(1) makes tax payable in advance during a financial year, in accordance with ss.208 to 219, in respect of the total income of the assessee which would be chargeable for the assessment year immediately following that financial year — that income being called the "current income"; and s.208 then says advance tax shall be payable during a financial year only in every case where the amount of such tax payable by the assessee during that year, computed in accordance with Chapter XVII-C, is ten thousand rupees or more. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 207, section 207(1), section 208, section 209, section 234B, section 234C of the Income Tax Act 1961. It is reported as Income-tax Act, 1961, ss.207(1) and 208, as printed on the departmental section pages stamped Year: 2025 and Year: 2024 (No. 1). Section 234B(1) charges interest only on an assessee 'who is liable to pay advance tax under section 208'. So the s.208 threshold is not a concession — it is a jurisdictional fact for the interest charge, and if the advance tax computed under s.209 comes to less than ten thousand rupees there is no advance tax liability and therefore nothing for s.234B or s.234C to bite on. Two things are constantly got wrong here. First, the ten thousand rupee test is applied to the advance tax as computed under the whole of Chapter XVII-C — that is, after the s.209(1)(d) reduction for tax deductible or collectible at source — and not to the gross tax on total income; a salaried assessee whose entire tax is covered by s.192 deduction has no advance tax liability at all. Second, s.207(1) fixes the base as the current income of the financial year, so the charge is on an estimate made prospectively, not on the assessed income determined years later; s.234B then bridges the gap by working on the assessed tax. Note also that s.207(1) is expressly 'in accordance with the provisions of sections 208 to 219 (both inclusive)', which is what makes the machinery sections — s.209 computation, s.210 payment, s.211 instalments, s.219 credit — conditions of the charge rather than administrative detail. If it applies to you, the first step is this: Compute the advance tax the way s.209 requires — estimate the current income, apply the rates in force in the financial year, then reduce by tax deductible or collectible at source under s.209(1)(d) — and only then test it against the ten thousand rupee figure in s.208.
Section 207 is headed 'Liability for payment of advance tax'. Sub-section (1) reads: 'Tax shall be payable in advance during any financial year, in accordance with the provisions of sections 208 to 219 (both inclusive), in respect of the total income of the assessee which would be chargeable to tax for the assessment year immediately following that financial year, such income being hereafter in this Chapter referred to as "current income".' Sub-section (2) disapplies sub-section (1) for a resident individual who has no income chargeable under the head 'Profits and gains of business or profession' and is sixty years of age or more at any time during the previous year. Section 208 is headed 'Conditions of liability to pay advance tax' and reads in full: '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.' Both sections sit in Chapter XVII, Part C, of the Income-tax Act, 1961. The matter was decided on 2025-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. Advance tax is payable during a financial year on the assessee's estimated current income for that year, but only where the advance tax so computed under Chapter XVII-C is ten thousand rupees or more. Section 207(1) supplies the charge and identifies the base; s.208 supplies the monetary condition on which the charge depends. The words 'as computed in accordance with the provisions of this Chapter' in s.208 mean the threshold is tested on the figure arrived at after the s.209 computation, including the s.209(1)(d) reduction for tax deductible or collectible at source, and not on the gross tax on total income.
Not applicable — this is a statement of the statutory text as printed on the departmental section pages. No judicial reasoning is involved. In the words reproduced by the source cited on this page: "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."
It was decided by the CBDT Circulars & Instructions on 2025-04-01 and is reported as Income-tax Act, 1961, ss.207(1) and 208, as printed on the departmental section pages stamped Year: 2025 and Year: 2024 (No. 1). Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 207, section 207(1), section 208, section 209, section 234B, section 234C, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. Advance tax is payable during a financial year on the assessee's estimated current income for that year, but only where the advance tax so computed under Chapter XVII-C is ten thousand rupees or more. Section 207(1) supplies the charge and identifies the base; s.208 supplies the monetary condition on which the charge depends. The words 'as computed in accordance with the provisions of this Chapter' in s.208 mean the threshold is tested on the figure arrived at after the s.209 computation, including the s.209(1)(d) reduction for tax deductible or collectible at source, and not on the gross tax on total income. It arises in Assessment & Scrutiny, Demand, Recovery & Stay and How Tax Law Is Read matters, on section 207, section 207(1), section 208, section 209, section 234B, section 234C of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. If the figure falls below ten thousand rupees, take the point as a threshold objection to the s.234B charge itself: s.234B(1) operates only on an assessee liable to pay advance tax under s.208. Where the assessee is an individual resident in India aged sixty or more with no business or professional income, check s.207(2) first — it disapplies s.207(1) altogether and the s.208 arithmetic never has to be done. Remember that the s.208 test is applied for each financial year separately, on the current income of that year, so a liability in one year proves nothing about the next. Keep the working papers for the estimate. Section 207(1) charges advance tax on estimated current income, and the reasonableness of the estimate is what the s.234C provisos and the s.216 under-estimate charge turn on.
Still good law. Two departmental pages of different vintage (Year: 2025 and Year: 2024 (No. 1)) print identical text for each section, which is the strongest evidence available this pass that no later amendment has displaced them. That is not a substitute for reading the current Finance Act: no Finance Act text was retrieved for s.208 this pass, and the ten thousand rupee figure could not be dated. Validity was not checked against any judicial decision. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Both sections were transcribed in full this pass from two departmental pages that print identical text: https://incometaxindia.gov.in/w/section-207-64 and https://incometaxindia.gov.in/w/section-208-64 (each headed 'Income-tax Act, 1961' and stamped Year: 2025), and again from https://incometaxindia.gov.in/w/section-207-62 and https://incometaxindia.gov.in/w/section-208-62 (Year: 2024 (No. 1)). Headings as printed: 'Liability for payment of advance tax' for s.207 and 'Conditions of liability to pay advance tax' for s.208. On verification both -64 pages were re-fetched independently and returned the same Act name, the same Year: 2025 stamp, the same headings and text identical word for word. I could NOT date the ten thousand rupee figure in s.208: no footnote apparatus rendered on any of the four pages, and an indiankanoon phrase search for a Finance Act section headed 'Amendment of section 208' returns no such provision, so this entry does not state when the figure was raised and no earlier figure should be inferred from it. The current shape of s.207 — the old section renumbered as sub-section (1) with a new sub-section (2) added — was verified from the Finance Act 2012, s.82, read at https://indiankanoon.org/doc/37047129/. The decided_on date of 1 April 2025 is NOT an established commencement date for either section: it records the vintage of the departmental text relied on (Year: 2025), and is used because the commencement of the present s.208 figure could not be established. I did not read the Income-tax Act, 2025; per the governing brief this entry is written against the Income-tax Act, 1961, which governs every assessment year up to and including AY 2026-27. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Advance tax is payable during a financial year on the assessee's estimated current income for that year, but only where the advance tax so computed under Chapter XVII-C is ten thousand rupees or more. Section 207(1) supplies the charge and identifies the base; s.208 supplies the monetary condition on which the charge depends. The words 'as computed in accordance with the provisions of this Chapter' in s.208 mean the threshold is tested on the figure arrived at after the s.209 computation, including the s.209(1)(d) reduction for tax deductible or collectible at source, and not on the gross tax on total income.
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