Section 404: the ₹10,000 threshold for advance tax liability

Introduction

The ₹10,000 test applies to the advance-tax amount for the financial year, computed under this Part of the Act. The section states the threshold; the computation rules sit elsewhere in the same Part.

Key takeaways

What Section 404 says

"Advance tax shall be payable by the assessee during a financial year, where the amount of such tax payable during that year, as computed under this Part, is ₹10,000 or more."

Practical scope

Apply the threshold only after checking the advance-tax framework. Section 403 includes a resident-individual exception where the individual is sixty or older at any time during the tax year and has no income chargeable under the business or profession head. The ₹10,000 test should not erase that exception.

For a person within the liability framework, calculate advance tax under Section 405 and compare that resulting amount with ₹10,000. The threshold includes an amount exactly equal to ₹10,000.

Limits and separate checks

The threshold is not gross receipts, turnover or total income. Nor should every assumed source-tax amount be subtracted without applying Section 405’s conditions for the deductible or collectible amount.

Crossing the threshold does not make all advance tax payable on one arbitrary date. Sections 406 and 408 deal with payment and instalments; the applicable schedule must be read separately.

Step-by-step computation review

1. Check the person’s liability position under Section 403, including its resident senior-individual exception where relevant.

2. Compute the advance-tax amount under Section 405 using the applicable income estimate, rate and source-tax conditions.

3. Compare the result with ₹10,000: below that amount does not meet Section 404; that amount or more does.

4. Apply the relevant instalment rules and update the computation when the statutory framework requires or permits a revised estimate.

Hypothetical example

Hypothetical illustration: assume the person is within the advance-tax liability framework and the correctly computed amount under Section 405 is ₹9,999. The Section 404 threshold is not met. If the correctly computed amount is ₹10,000, it is met. These figures concern the computed advance tax, not income or turnover, and do not override the Section 403 exception.

Records and checklist

The liability and exception analysis under Section 403.

The Section 405 computation and evidence for source-tax adjustments.

Applicable instalment schedule and payment records.

Official amended Act source

• Income-tax Act, 2025 as amended by Finance Act, 2026: Section 404

Step-by-step flow for applying the Section 404 threshold

1. 1

   Is the assessee within the advance-tax liability at all?

   Check Section 403 first, including the exception for a resident individual aged sixty or more with no business or professional income.

2. 2

   Compute the advance tax payable during the financial year under this Part

   Use Section 405: advance tax (A) = income-tax on the specified sum (B) − tax deductible or collectible at source that meets the conditions in Section 405 (C).

3. 3

   Is the computed amount ₹10,000 or more?

   Section 404 tests the computed advance tax, not income or turnover.

   • Less than ₹10,000: The Section 404 condition is not met. Advance tax is not payable for that financial year.
   • ₹10,000 or more: Advance tax is payable. Go to the next step.
4. 4

   Pay in the instalments that apply

   Section 404 does not set dates. Use Section 408 for the instalments and Section 406 or 407 for the route of payment.

Practical checklist

Glossary

Advance-tax amount

The amount computed under the advance-tax Part before applying its payment schedule.

Threshold

The minimum computed amount that meets the Section 404 condition: ₹10,000 or more.

Frequently asked questions