Section 404: Compute advance tax — Each instalment

Advance tax becomes payable by the assessee during a financial year where the amount of such tax payable during that year, as computed under the relevant Part, is ₹10,000 or more. That single sentence is the whole entry gate, and it sits in section 404 of the Income-tax Act, 2025, inside the Part that governs advance payment of tax. Once through the gate, a company pays in four instalments on fixed dates with cumulative percentages, and every figure in the computation should trace back to a dated worksheet built from the company's own estimate of current income.

The entry test comes before the calendar

Do not open the instalment calendar until the entry test is answered. Compute the year's advance-tax liability first; if it sits below ₹10,000, there is no advance-tax obligation to schedule, and instalment percentages of nothing are nothing. The threshold applies to the tax payable as computed under the Part, which means after the computation mechanics in section 405 of the Income-tax Act, 2025 have been applied to the company's own estimate of current income. Keep that computation on file with the workings, because the entry answer is only as defensible as the estimate behind it.

Collect the inputs per instalment date

Each instalment is a fresh computation, not a copy of the last one. Profits move, credits arrive, and payments already made reduce what remains. Gather these inputs before every instalment calculation and record them in a dated instalment worksheet.

Note: the table above organises the company's own estimate of current income for the computation under section 405 of the Income-tax Act, 2025. TDS and TCS enter only as variable C of that computation; earlier advance-tax instalments are a separate deduction applied against the cumulative floor in section 408.

Separate the two assessment languages

Assessment year 2026–27 belongs to the old framework and its return forms; tax year 2026–27 belongs to the Income-tax Act, 2025. An instalment computed for one language and paid or recorded under the other creates a mismatch that surfaces months later as an apparent shortfall. Label every worksheet, challan and reconciliation with the correct period language before any money moves, and keep the period decision visible on the workings.

The four dates and the cumulative percentages

All assessees liable to pay advance tax, other than the assessee covered by the single-instalment exception, pay on current income in four instalments during each financial year, with each instalment's due date and amount fixed in the statutory Table. That machinery sits in section 408 of the Income-tax Act, 2025, and the percentages below are its cumulative floors, each reduced by amounts already paid in earlier instalments. The cumulative character is the point most often missed: each date tests total paid so far, not just the current payment, and the shortfall arithmetic runs on the running total.

Note: the schedule above applies the Table in section 408 of the Income-tax Act, 2025 to the company's computed liability.

The single-instalment exception never applies to a company

Section 408(2) of the Income-tax Act, 2025 lets an assessee who declares profits and gains under section 58(2) (Table: Sl. No. 1 or 3) pay the whole advance tax on or before 15 March instead of in four instalments. Those two Table rows are confined to particular assessees. Sl. No. 1 covers an "eligible assessee", which section 58(11)(a) defines as an individual, a Hindu undivided family, or a firm other than a limited liability partnership, resident in India. Sl. No. 3 covers a "specified assessee", which section 58(11)(b) defines as an individual or a firm, other than a limited liability partnership, resident in India. A company is neither. A private limited company therefore always pays on the four-instalment Table in section 408(1); there is no presumptive route to a single March payment, and a company that defers three instalments on that footing has simply created three shortfalls.

Payments up to 31 March still count

Any amount paid by way of advance tax on or before 31 March is treated as advance tax paid during the financial year ending on that day for all purposes of the Act. That closing-bracket rule in section 408(3) of the Income-tax Act, 2025 matters for the final reconciliation between the March instalment and the return. A late-March payment does not rewrite missed instalment dates, but it does enter the year's paid total, so keep the challan with the March workings.

Do it in order

• Reforecast profit for the full year as of the instalment date, updating revenue, costs, capital gains and any regime-sensitive items since the last computation. The estimate is the company's own current income for the year — the "specified sum" in section 406(3) of the Income-tax Act, 2025.
• Compute net liability using A = B − C in section 405 of the Income-tax Act, 2025: B is income-tax on the specified sum at the rates in force, and C is income-tax deductible or collectible at source during the year on income included in that sum. A is the year's advance tax. TDS and TCS are deducted here, once, and never again.
• Apply the cumulative percentage for the instalment date to A, giving the total that must stand paid by that date. The percentages and dates come from the Table in section 408 of the Income-tax Act, 2025.
• Subtract advance tax already paid in earlier instalments — and only that — to reach the amount due now. Do not deduct TDS or TCS again at this step; they already reduced A in step 2. Pay on or before the due date on the company's own accord, which is the payment route in section 406(1) of the Income-tax Act, 2025, and file the challan with the workings.
• Adjust within the year by increasing or reducing the remaining instalments to match the latest estimate. Section 406(2) of the Income-tax Act, 2025 expressly permits a person who has paid an instalment to increase or reduce the advance tax payable in the remaining instalments to accord with the revised specified sum. Date and keep each revision.

Worked example: ₹10 lakh net liability across four dates

Take a company whose reforecast holds steady all year at ₹10 lakh of advance tax (A, after deducting expected TDS and TCS under section 405). The cumulative floors give ₹1.5 lakh by 15 June, ₹4.5 lakh by 15 September, ₹7.5 lakh by 15 December and ₹10 lakh by 15 March, each figure reduced only by advance tax already paid. The dates and percentages apply the Table in section 408 of the Income-tax Act, 2025, and the running ledger below is the format to keep.

Note: the illustration above assumes a steady estimate; real years move, and each reforecast reruns the same cumulative test against the Table in section 408 of the Income-tax Act, 2025.

When the December reforecast jumps

Suppose the December reforecast lifts A from ₹10 lakh to ₹14 lakh. The 15 December floor becomes 75% of ₹14 lakh — ₹10.5 lakh total — against ₹4.5 lakh already paid, so ₹6 lakh falls due in December rather than ₹3 lakh. Catching the jump at the instalment date costs only the larger payment; discovering it at return-filing time converts the same gap into a deferment exposure. The upward revision is the one section 406(2) of the Income-tax Act, 2025 allows, and the reforecast that drove it should be kept with the December challan.

The Assessing Officer route runs in parallel

Where the company has already been assessed by regular assessment and the Assessing Officer considers it liable, the officer may order advance-tax payment in specified instalments, with the order passable during the financial year but not later than the last day of February, followed by a notice of demand. That parallel machinery sits in section 407 of the Income-tax Act, 2025, with the higher-of rule for the specified sum and the intimation procedure where the company's own estimate runs lower. A company under such an order still estimates, still intimates where required, and still keeps every order, intimation and challan with its workings.

If you get it wrong

A person is deemed an assessee in default on instalments covered by an Assessing Officer order where the instalment goes unpaid, the required intimation is not sent, or the estimate-based payment is not made. That default machinery sits in section 409 of the Income-tax Act, 2025. Beyond default status, shortfall and deferment draw interest under sections 424 and 425 of the Income-tax Act, 2025 — the successors to the old 234B and 234C. Interest is not a generic penalty; it prices the specific shortfall period, which is why dated payment evidence decides the final number.

FAQ

We paid nothing in June because liability looked small. Problem?

Only if the year's computed liability reaches the section 404 threshold of the Income-tax Act, 2025. Below ₹10,000 there is no obligation; above it, the June floor is tested against the final number, so an early underestimate becomes a first-instalment shortfall. Reforecast now and true-up at the next date under section 406(2).

Do TDS credits reduce the June instalment?

Yes, but only once. Tax deductible or collectible at source during the year is variable C in the section 405 computation of the Income-tax Act, 2025, so it comes off before any percentage applies, and realistic credits lower every instalment floor. It is not deducted a second time when you net off earlier instalments. Credits must be genuinely expected and later reconciled to actual deductions.

Can we skip September and pay double in December?

The September floor is tested on its own date against the cumulative percentage in the Table of section 408 of the Income-tax Act, 2025. A December catch-up pays the tax but does not erase the September deferment period from the interest arithmetic under section 425. Keep each instalment dated and evidenced.

Does the 31 March payment save a missed March instalment?

It enters the year's paid total for all purposes of the Income-tax Act, 2025 under section 408(3), but the 15 March date still governs the instalment test. Pay before the date where possible; where missed, pay immediately and preserve the challan.

Our income is small and steady — can the company pay once, in March?

No. The single 15 March payment in section 408(2) of the Income-tax Act, 2025 is available only to an assessee declaring profits under section 58(2) (Table: Sl. No. 1 or 3), and those rows cover individuals, Hindu undivided families and firms other than limited liability partnerships as defined in section 58(11). A company always follows the four-instalment Table in section 408(1).

Officer order versus our estimate — which governs?

Both run together: the order sets specified instalments, while the company's lower or higher estimate follows the intimation and payment procedure in section 407 of the Income-tax Act, 2025. File intimations on time and keep copies.

Sources

• Income-tax Act, 2025, sections 403 to 409 (advance-tax liability, computation, own-accord payment, officer orders, instalment Table, default) and section 58(2) and 58(11) (presumptive Table rows and the assessees they cover), with shortfall and deferment interest in sections 424 and 425
• Finance Act of the relevant year for the rates in force applied in the computation
• The company's reforecast workings, instalment ledger, challans and credit schedules

For the general advance-tax explainer this task page supports, see the HRA parent article on who must pay and how instalments work: https://www.harunraaj.com/blog/advance-tax-calculation-payment-fy-2025-26 — retained there; this page outputs only the company instalment worksheet. The advance-tax calculator alongside it sits at https://www.harunraaj.com/tools/advance-tax-calculator.

What to send for a review

Send your tax year, projected taxable profit, regime position, special-rate income, expected credits and challans paid so far. Bring the reforecast workings so each instalment floor is computed from evidence rather than memory. The review returns your company instalment worksheet with dates, cumulative floors and amounts due.