Income Tax Act

Official PDF pages 511–515

SOURCE PDF PAGE 511
(4) If after making of an order by the Assessing Officer under sub-section (1),—
( a )   a return of income is furnished by the assessee, under section 263 or in
response to a notice under section 268; or
( b )   a regular assessment of the income is made in respect of a tax year, later
than the assessment referred to in sub-section (1),
the Assessing Officer may amend the order referred to in sub-section (1), and may
require such assessee to pay advance tax on the specified sum, calculated in the
manner laid down in section 405, on or before the due date of each instalment
specified in section 408.
(5) The order referred to in sub-section (4) may be passed at any time before the
1st March of that tax year and it shall be followed by issuance of a demand notice
under section 289.
(6) In sub-section (4) ,   “specified sum” means the total income declared in the return
of income or computed in regular assessment mentioned in sub-section (4)( a ) and
( b ), respectively.
(7) If the notice of demand issued under section 289, as referred in sub-sections (2)
and (5), is served after any of the due dates specified in section 408, the appropriate
part or, the whole of the amount of the advance tax specified in such notice, shall
be payable on or before each of the due date falling after the date of service of the
notice of demand.
(8) Where a person, who is served with an order referred to in sub-section (1) or (4) ,
estimates the advance tax payable on his current income to be lower than the amount
of advance tax specified in the said order, then, he may send an intimation in the
prescribed form to the Assessing Officer to that effect, and pay such advance tax on
the current income, calculated in the manner laid down in section 405 as accords
with his estimate, at an appropr iate percentage thereof on or before the due date
of each instalment specified in section 408 falling after the date of such intimation.
(9) Where a person, who is served with an order referred to in sub-section (1) or (4),
estimates that advance tax payable on his current income would exceed the amount
of advance tax specified in such order or intimated by him under sub-section (8) ,
he shall pay such advance tax on the current income, calculated in the manner
laid down in section 405 at the appropriate part or whole of such higher amount
of advance tax as accords with his estimate, on or before the due date of the last
instalment specified in section 408.
Instalments of advance tax and due dates.
408.   (1) All the assessees who are liable to pay advance tax, other than the assessee
referred to in sub-section (2), shall pay the same on the current income
calculated in the manner laid down in section 405 in four instalments during each
financial year and the due date of each instalment and the amount of such instal -
ment shall be as specified in the Table below:

──────────

SOURCE PDF PAGE 512
TABLE
Sl.
No.
Due date of
instalment
Amount payable
A   B   C
1.   On or before the
15th June.
Not less than 15% of such advance tax.
2.   On or before the
15th September.
Not less than 45% of such advance tax, as reduced by the
amount, if any, paid in the earlier instalment.
3.   On or before the
15th December.
Not less than 75% of such advance tax, as reduced by the
amount or amounts, if any, paid in the earlier instalment
or instalments.
4.   On or before the
15th March.
The whole amount of such advance tax, as reduced by the
amount or amounts, if any, paid in the earlier instalment
or instalments.
(2)   An assessee, who declares profits and gains as per the provisions of section 58(2)
(Table: Sl. No. 1 or 3), shall pay the whole amount of advance tax on the current
income, calculated in the manner laid down in section 405 during each financial
year, on or before the 15th March.
(3)   Any amount paid by way of advance tax on or before the 31st March, shall be
treated as advance tax paid during the financial year ending on that day for all the
purposes of this Act.
When assessee is deemed to be in default.
409.   A person shall be deemed to be an assessee in default, if such person—
( a )   does not pay on the date specified in section 408, any instalment of the
advance tax that he is required to pay by an order of the Assessing Officer
under section 407(1) and (4) ;   or
( b )   does not send to the Assessing Officer an intimation under section
407(8) on or before the date on which any such instalment as is not paid
becomes due; or
( c )   does not pay on the basis of his estimate of his current income, the ad -
vance tax payable by him under section 407(9),
in respect of such instalment or instalments.
Credit for advance tax.
410.   Any sum, other than a penalty or interest, paid by or recovered from an
assessee as advance tax in pursuance of this Part shall be treated as a
payment of tax in respect of the income of the tax year in which it was payable, and
credit therefor shall be given to such assessee in the regular assessment.

──────────

SOURCE PDF PAGE 513
D.—Collection and Recovery
When tax payable and when assessee deemed in default.
411.   (1) Any amount, otherwise than by way of advance tax, specified as payable
in a notice of demand under section 289 at the place and to the person
mentioned in the notice shall be paid within—
( a )   thirty days of the service of the notice; or
( b )   such period being a period less than thirty days, as specified in the
notice with the previous approval of the Joint Commissioner, where the
Assessing Officer has any reason to believe that it shall be detrimental
to revenue if the full period of thirty days is allowed.
(2)   Where any notice of demand has been served upon an assessee and any appeal
or other proceeding, as the case may be, is filed or initiated in respect of the amount
specified in the said notice of demand, then—
( a )   such demand shall be deemed to be valid till the disposal of the appeal
by the last appellate authority or disposal of the proceedings; and
( b )   any such notice of demand shall have the effect as specified in section
3 of the Taxation Laws (Continuation and Validation of Recovery Pro -
ceedings) Act, 1964 (11 of 1964).
97
[ (3)( a ) If the amount specified in any notice of demand under section 289 is not paid
within the period specified under sub-section (1),––
( i )   the assessee shall be liable to pay simple interest at 1% for every month or
part of a month comprised in the period; and
( ii )   such period shall commence from the day immediately following the end
of the period mentioned in sub-section (1) and end with the day on which
the amount is paid.
( b ) No interest shall be charged under this sub-section in respect of any demand raised
on account of penalty levied under section 439,—
( i )   up to the date of passing of the order under section 359;
( ii )   up to the date of passing of the order under section 363, where the
assessment or reassessment has been made in pursuance to directions
issued by the Dispute Resolution Panel under section 275. ]
(4)   No interest shall be charged under sub-section (3) on any amount for any period,
where interest is charged on the same amount for the same period under section
398(3)on the amount of tax specified in the intimation issued under section 399.
97.   Substituted by the Finance Act, 2026, w.e.f.   1-4-2026 . Prior to its substitution, sub-section
(3) read as under :
“(3)   If the amount specified in any notice of demand under section 289 is not paid within
the period limited under sub-section (1),—
( a )   the assessee shall be liable to pay simple interest at 1% for every month or part of a
month comprised in the period; and
( b )   such period shall commence from the day immediately following the end of the
period mentioned in sub-section (1) and end with the day on which the amount is
paid.”

──────────

SOURCE PDF PAGE 514
(5)   Nothing contained in sub-section (3) shall prevent the Assessing Officer, where an
application is made by the assessee before the expiry of the due date under sub-sec -
tion (1), to extend the time for payment or allow payment by instalments, subject
to such conditions as he may think fit to impose in the circumstances of the case.
(6)   Where as a result of an order under section 287 or 288 or 359 or 363 or 365(10)
or 368 or 378 or an order of the Settlement Commission under section 245D(4) of
the Income-tax Act, 1961 (43 of 1961),—
( a )   the amount on which interest was payable under sub-section (3) had
been reduced, the interest shall be reduced accordingly and the excess
interest paid, if any, shall be refunded; and
( b )   if subsequent to such reduction, as a result of an order under said
sections or section 377, the amount on which interest was payable is
increased, the assessee shall be liable to pay interest under sub-section
(3),—
( i )   from   the   day   immediately   following   the   end   of   the   period
mentioned in the first notice of demand, referred to in sub-section
(1); and
( ii )   ending with the day on which the amount is paid.
(7)   Irrespective of the provisions contained in sub-section (3), the Principal Chief
Commissioner or Chief Commissioner or Principal Commissioner or Commissioner
may, on an application by the assessee, reduce or waive the amount of interest paid
or payable by an assessee under sub-section (3) if he is satisfied that—
( a )   payment of such amount has caused or would cause genuine hardship
to the assessee;
( b )   default in the payment of the amount on which interest has been paid or
was payable under the said sub-section was due to circumstances beyond
the control of the assessee; and
( c )   the assessee has co-operated in any inquiry relating to the assessment
or any proceeding for the recovery of any amount due from him.
(8)   The order under sub-section (7) accepting or rejecting the application of the
assessee, either in full or in part, shall be passed within twelve months from the
end of the month in which the application is received.
(9)   No order under sub-section (7) rejecting the application, either in full or in part,
shall be passed unless the assessee has been given an opportunity of being heard.
(10)   If the amount is not paid within the specified time under sub-section (1) or
extended under sub-section (5), at the place and to the person mentioned in the
said notice, the assessee shall be deemed to be in default.
(11) If, in a case where payment by instalments is allowed under sub-section (5),
the assessee commits defaults in paying any one of the instalments within the time
fixed under that sub-section,—
( a )   the assessee shall be deemed to be in default as to the whole of the amount
then outstanding; and

──────────

SOURCE PDF PAGE 515
( b )   the other instalment or instalments shall be deemed to have been due
on the same date as the instalment actually in default.
(12) Where an assessee has presented an appeal under section 356 or 357, the
Assessing Officer may, in his discretion and subject to such conditions as he may
think fit to impose in the circumstances of the case, treat the assessee as not being
in default in respect of the amount in dispute in the appeal, even though the time
for payment has expired, till the time such appeal remains undisposed of.
(13) Where an assessee has been assessed in respect of income arising outside India
in a country, the laws of which prohibit or restrict the remittance of money to India,
the Assessing Officer shall—
( a )   not treat the assessee as in default in respect of that part of the tax which
is due in respect of that amount of his income which, by reason of such
prohibition or restriction, cannot be brought into India; and
( b )   continue to treat the assessee as not in default in respect of such part of
the tax until the prohibition or restriction is removed.
(14) For the purposes of sub-section (13) ,   income shall be deemed to have been
brought into India, if—
( a )   it has been utilised or could have been utilised for the purposes of any
expenditure actually incurred by the assessee outside India; or
( b )   the income, whether capitalised or not, has been brought into India in
any form.
Penalty payable when tax in default.
412.   (1) When an assessee is in default or is deemed to be in default in making a
payment of tax, he shall, in addition to the amount of the arrears and the
amount of interest payable under section 411(3), be liable, by way of penalty, to
pay—
( a )   such amount as the Assessing Officer may direct; and
( b )   in the case of a continuing default, such further amount or amounts as
the Assessing Officer may, from time to time, direct.
(2)   The total amount of penalty under sub-section (1) shall not exceed the amount
of tax in arrears.
(3)   No penalty under sub-section (1) shall be levied—
( a )   unless the assessee has been given a reasonable opportunity of being
heard;
( b )   where the assessee proves to the satisfaction of the Assessing Officer that
the default was for good and sufficient reasons.
(4)   The assessee shall not cease to be liable to any penalty under sub-section (1)
merely by reason of the fact that before the levy of such penalty he has paid the tax.
(5)   Where as a result of any final order the amount of tax, with respect to the de -
fault in the payment of which the penalty was levied, has been wholly reduced, the
penalty levied shall be cancelled and the amount of penalty paid shall be refunded.