Over the past week, many taxpayers have received notices from the Income Tax Department (ITD) questioning their lower advance tax payments for FY 2025-26.
The department has started reviewing payments made up to 15 September 2025 – the second instalment deadline and comparing them with the same period of the previous year.
This is because the ITD noticed that several taxpayers have paid less advance tax this year, even though their income appears similar or higher than last year. The department now wants them to explain the reason for the drop. For example, if you paid ₹1 lakh last year and ₹80k this year, you might receive a notice.
Under Section 210(3) of the Income Tax Act, the Assessing Officer (AO) can ask a taxpayer for:
- the reason for the drop in payment,
- proof of how you’ve estimated your current income, and
- issue a demand notice u/s 156 and pay additional advance taxes
You need to respond before the compliance date mentioned in your notice.
How to handle the notice?
If you’ve received one, here’s what you should do:
1. Check your income estimate
Add up income you expect to earn this year – salary, business, capital gains, interest, rent, etc.
2. Compute tax for FY 2025-26
Apply current tax rates, reduce TDS/TCS, and see how much advance tax you owe.
You can also log in to Quicko > Taxes > Save module to easily calculate your advance tax liability.
3. Compare it with what you paid
If the instalment you paid is genuinely lower, prepare a short explanation. It could be because:
- business or professional income is expected to fall,
- projects or payments got delayed,
- deductions or losses are higher, or
- income will be recognised later in the year.
4. Reply to the ITD
Upload your reply and a simple computation on the e-filing portal before the compliance date mentioned in the notice.
That’s it. The AO just needs a logical, documented reason.
What happens if you don’t reply?
If you ignore the notice, the ITD can pass an order fixing your advance tax based on its own estimate and you’ll have to pay the higher amount they calculate.
You may also have to bear interest penalty under Sections 234B and 234C for underpayment or deferment.
To conclude, if your income this year is lower, no problem. Just say so and support it with your computation. If it isn’t, consider topping up your next instalment by 15 December 2025 to avoid interest later.
If you need assistance, you can connect with one of our experts to accurately calculate your advance taxes and help you respond to the notice.