Payment of advance tax by assessee on his own accord
[Section-406 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 406(1) of Income Tax Act 2025
406(1) Every person, who is liable to pay advance tax under section 404 (whether or not he has been previously assessed by way of regular assessment) shall, on his own accord, pay advance tax on the specified sum, calculated in the manner laid down in section 405, at the appropriate percentage, and on or before the due date of each instalment, as specified in section 408.
Section 406(2) of Income Tax Act 2025
406(2) A person who pays any instalment or instalments of advance tax under sub-section (1), may increase or reduce the amount of advance tax to accord with specified sum and the advance tax payable thereon, and make payment of the said tax in the remaining instalment or instalments, accordingly.
Section 406(3) of Income Tax Act 2025
406(3) In this section, the expression “specified sum” means current income as estimated by the assessee.
FAQs on Section 406 of Income Tax Act 2025
Who is required to pay advance tax on their own accord under Section 406?
Any person who is liable to pay advance tax under section 404 must pay such tax on their own accord, regardless of whether they have previously been assessed through regular assessment.
How is the amount of advance tax to be calculated by the assessee?
The advance tax must be calculated based on the “specified sum” in the manner provided under section 405 and paid at the appropriate percentage on or before the due dates mentioned in section 408.
What does the term “specified sum” mean in Section 406?
“Specified sum” refers to the current income as estimated by the assessee.
Is it mandatory to pay advance tax in instalments?
Yes, the advance tax must be paid in instalments on or before the due dates as specified under section 408.
Can an assessee revise the amount of advance tax payable during the financial year?
Yes, under Section 406(2), an assessee may increase or reduce the amount of advance tax in subsequent instalments to match the specified sum and the tax payable on it.
Can advance tax be paid voluntarily without any notice or demand from the tax authorities?
Yes, advance tax under Section 406 must be paid voluntarily by the assessee on their own accord without requiring any notice or demand.
Does the assessee need to follow a fixed estimate throughout the year?
No, the assessee can revise the estimate of income (specified sum) and adjust the remaining instalments accordingly.
If the estimated income changes significantly during the year, what should the assessee do?
The assessee should recalculate the advance tax based on the revised estimated income and adjust the upcoming instalments to reflect the revised liability.
Does Section 406 apply only to individuals or to all types of taxpayers?
Section 406 applies to every person liable to pay advance tax under section 404, including individuals, firms, companies, and other entities.
Is there any penalty for not revising the advance tax instalments when income increases?
While Section 406 allows revision of instalments, failure to pay adequate advance tax based on the revised estimate may attract interest under relevant provisions for shortfall in payment.
Is any formal intimation or declaration needed to revise the advance tax instalment under Section 406(2)?
No formal declaration is required. The assessee can simply pay the revised amount in the remaining instalment(s) as per their updated estimate.
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