Chapter XIX - Collection and Recovery of Tax
Section 403
Section 403: liability for payment of advance tax
Section 403 opens Part B of Chapter XIX, dealing with advance tax - the "pay as you earn" system that requires tax to be paid during the financial year on estimated current income, rather than only after the year ends. It also defines "current income" and carves out an exemption for resident senior citizens without business or professional income.
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Need advice on Section 403?
This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) Advance tax shall be payable during any financial year in respect of the current income of the assessee, as per the provisions of this Part.
(2) For the purposes of this Part, “current income” of a tax year means the total income of the assessee which would be chargeable to tax for such tax year.
(3) The provisions of sub-section (1) shall not apply to an individual resident in India, who— (a) does not have any income chargeable under the head “Profits and gains of business or profession”; and (b) is of the age of sixty years or more at any time during the tax year.
Introduction
Section 403 states the starting rule for advance tax on an assessee’s current income and defines that expression for this Part.
It also removes the subsection (1) obligation for a resident individual aged sixty or more during the tax year who has no income chargeable under the business or profession head. The separate monetary threshold appears in section 404.
Key takeaways
Current income basis
Advance tax relates to current income that would be chargeable for the tax year.
Resident senior individual exception
Both residence and age, plus absence of business or professional income, are necessary for the subsection (3) exception.
Check section 404 too
The amount threshold for liability is stated in the next section.
The basic advance tax obligation
Advance tax is payable during any financial year in respect of the current income of the assessee, as per the provisions of this Part.
"Current income" of a tax year means the total income of the assessee which would be chargeable to tax for that tax year.
Exemption for resident senior citizens
The advance tax obligation does not apply to an individual resident in India who: does not have any income chargeable under "Profits and gains of business or profession"; and is of the age of sixty years or more at any time during the tax year.
Applying Section 403 in practice
Who should test it. Advance tax concerns estimated current income during the financial year. A resident individual aged 60 or more at any time during the tax year who has no income chargeable under profits and gains of business or profession falls within the section's exception. Other persons should compute the likely tax and then apply the section 404 threshold and payment schedule.
Hypothetical example
A resident retiree over 60 with only pension and interest may use the exception, while a similarly aged person with taxable consultancy income must test the advance-tax rules.
Step-by-step flow for applying Section 403
- 1
Estimate current income
Under Section 403(2), current income is the total income that would be chargeable to tax for the tax year. Section 403(1) makes advance tax payable during the financial year on this income.
- 2
Is the assessee an individual resident in India?
- No: The exception in Section 403(3) is not available. Go to step 5.
- Yes: Go to the next step.
- 3
Does the individual have any income chargeable under the head "Profits and gains of business or profession"?
- Yes: The exception is not available. Go to step 5.
- No: Go to the next step.
- 4
Is the individual sixty years or more at any time during the tax year?
- Yes: Section 403(1) does not apply. No advance tax is payable under this Part.
- No: Go to the next step.
- 5
Advance tax is payable under Section 403(1)
Next, compute the amount under Section 405 and check the threshold in Section 404.
Practical checklist
Do
- Estimate chargeable current income and check section 404’s threshold.
- For the senior-individual exception, check residence, age during the tax year and whether there is business or professional income.
- project all chargeable income, deductions and available tax credits; identify business or professional income; revisit the estimate after a material change.
Avoid
- Do not assume age sixty alone removes advance-tax liability.
Illustrative example
Worked example: two retired siblings
Hypothetical facts (illustration only, not a real taxpayer): Mr. Rao and his sister Ms. Rao are both resident in India. Mr. Rao turns sixty on 10 January 2027, during the tax year 1 April 2026 to 31 March 2027; his only income is pension and bank interest. Ms. Rao is sixty-two and also earns consultancy fees chargeable under "Profits and gains of business or profession".
Current income
For each of them, current income is the total income that would be chargeable for the tax year (Section 403(2)).
Mr. Rao
He is a resident individual, has no business or professional income, and is sixty at a point during the tax year. All conditions in Section 403(3) are met.
Ms. Rao
She meets the age and residence conditions but has income chargeable under the business or profession head, so Section 403(3)(a) is not met.
Next step for Ms. Rao
Advance tax is payable under Section 403(1), subject to the computation in Section 405 and the threshold in Section 404.
Outcome
- Mr. Rao is outside Section 403(1) for that tax year.
- Ms. Rao must test her advance tax under Sections 404 and 405; her age alone does not exempt her.
Frequently asked questions
Who is exempt from paying advance tax?
A resident individual aged 60 or more at any time during the tax year, provided they have no income chargeable under "Profits and gains of business or profession" - under Section 403(3).
What does "current income" mean for advance tax purposes?
The total income of the assessee which would be chargeable to tax for that tax year, as defined in Section 403(2).
Does section 403 set installment dates?
No; use the provisions governing computation and payment timing.
Need help applying this provision to your situation?
Get help computing and paying your advance taxLast updated 10 October 2026