Section 405
Section 405: computation of advance tax
Section 405 gives the exact formula used to work out advance tax, whether it is being paid voluntarily by the assessee (Section 406) or in pursuance of an Assessing Officer's order (Section 407), and explains how net agricultural income is factored in where the Finance Act requires it.
This explanation is AI-assisted and pending review by our CA/CS team. It is general information, not professional advice - always cross-check against the bare law text above or talk to our tax team for guidance specific to your situation.
The advance tax formula
The amount of advance tax payable in a financial year is computed as:
- A = B - C
- A = the amount of advance tax payable in the financial year
- B = income-tax on the "specified sum" (as defined in Section 406 or 407, depending on the route) calculated at the rates in force in the financial year
- C = the amount of income-tax which would be deductible or collectible at source during that financial year under any provision of the Act, from income that: (a) is computed before allowing any deduction admissible under the Act and has been taken into account in computing the specified sum; and (b)(i) has actually been paid or credited after deduction of tax by the deductor, or (ii) has actually been received or debited after collection of tax by the collector.
Net agricultural income adjustment
Where the Finance Act of the relevant year provides that net agricultural income is to be taken into account in computing advance tax: for the purposes of an Assessing Officer's order under Section 407(1) and (4), the net agricultural income is the amount already taken into account in charging tax on the specified sum under Section 407(3) and (6); in any other situation, it is the net agricultural income as estimated by the assessee for the tax year.
Frequently asked questions
What is the formula for computing advance tax?
A = B - C, where B is income-tax on the specified sum at the rates in force for the financial year, and C is the tax that would be deductible or collectible at source on the relevant income during that year.
Does TDS already deducted reduce the advance tax payable?
Yes - the formula subtracts (C) the tax deductible/collectible at source on the income already factored into the specified sum, so an assessee is not asked to pay advance tax on income where TDS/TCS will separately apply.
Related sections
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Get help computing your advance tax liabilityLast updated 9 September 2026