Section 403 of the Income-tax Act, 2025 — Liability for Payment of Advance Tax

In plain language

What Section 403 actually says

Section 403 of the Income-tax Act, 2025 is the charging (foundation) provision for advance tax. In plain words, it says: "Advance tax shall be payable during any tax year in respect of the current income of the assessee, in accordance with Sections 404 to 408." This is the section that creates the basic obligation to pay tax on your income as you earn it during the year — the "pay-as-you-earn" principle — rather than waiting until you file your return after the year ends.

Section 403 corresponds to the old Section 207 of the Income-tax Act, 1961. The substance is unchanged; the 2025 Act simply renumbers it and uses cleaner language and the new concept of "tax year".

Key terms defined in Section 403

• Current income: the total income of the assessee that would be chargeable to tax for that tax year. Because the year is still running, this is an estimate made in good faith.
• Tax year: the twelve-month period (1 April to 31 March) for which income is being computed — the new term that replaces "previous year".

Who Section 403 applies to

The advance-tax charge is wide. It covers every assessee, including:

• Individuals and Hindu Undivided Families (HUFs)
• Firms and Limited Liability Partnerships (LLPs)
• Companies (domestic and foreign)
• Association of Persons (AOP), Body of Individuals (BOI) and other entities
• Non-residents earning taxable income in India

The one exemption built into Section 403

Section 403 itself carves out a specific relief for resident senior citizens. An individual is not required to pay advance tax if both conditions are met:

• The individual is resident in India and is 60 years of age or more at any time during the tax year; and
• The individual has no income under the head "Profits and gains of business or profession".

So a retired person living on pension, bank interest, rent or capital gains does not have to pay advance tax at all — they can pay everything as self-assessment tax when filing the return, without attracting interest under Sections 423–425. But a senior citizen who runs a shop, practises a profession, or earns business income loses this shelter and must pay advance tax like everyone else.

How Section 403 interacts with the rest of the advance-tax scheme

Section 403 only creates the charge. The mechanics live in the neighbouring sections, so you must read them together:

• Section 404 — sets the monetary gateway: advance tax is payable only where the estimated tax liability for the year is ₹10,000 or more (after reducing expected TDS/TCS and reliefs). If your net liability is below ₹10,000, you are outside the net.
• Section 405 — the computation formula: Advance tax = tax on estimated total income at applicable rates, minus TDS/TCS expected to be deducted or collected.
• Section 406/407 — empower the Assessing Officer to issue (and amend) an order directing an assessee to pay advance tax.
• Section 408 — the instalment calendar and due dates.

Practical implications for a normal taxpayer

• If you are salaried and your employer deducts full TDS, you usually have no advance-tax gap — TDS already covers you. Problems arise when you have extra income (interest, capital gains, freelancing, rent, dividends) on which enough tax was not deducted.
• Miss the instalments and you pay interest under Section 423 (like old 234B) and Section 424/425 (like old 234C) — a real cost, so estimate honestly.
• Capital gains and lottery/dividend income that cannot be foreseen are given relief in the computation rules — you pay the advance tax in the instalment falling due after the income arises.