Chapter XIX - Collection and Recovery of Tax
Section 406
Section 406: payment of advance tax by the assessee on his own accord
Section 406 is the voluntary route for paying advance tax - every assessee liable under Section 404 must pay advance tax based on their own estimate of current income, and can adjust the remaining instalments as that estimate changes through the year.
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Need advice on Section 406?
This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(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, on or before the due date of each instalment, as specified in section 408.
(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 payable in the remaining instalment or instalments 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.
(3) For the purposes of this section, the expression “specified sum” means current income as estimated by the assessee.
Introduction
A person liable for advance tax under section 404 pays on the basis of estimated current income, whether or not previously assessed regularly.
The person may revise the estimated amount for later instalments. The calculation method is in section 405 and the instalment dates and percentages are in section 408.
Key takeaways
Self-estimate
The “specified sum” is current income estimated by the assessee.
Prior assessment not required
Self-payment applies whether or not the person has already had a regular assessment.
Later instalments adjustable
The person may increase or reduce remaining instalments to reflect a revised estimate.
Cross-references control
Use section 405 for computation and section 408 for dates and percentages.
Self-estimated advance tax
Every person liable to pay advance tax under Section 404 (whether or not previously assessed by way of regular assessment) must, on his own accord, pay advance tax on the "specified sum", calculated as laid down in Section 405, at the appropriate percentage, on or before the due date of each instalment specified in Section 408.
Revising later instalments
A person who has paid one or more instalments of advance tax may increase or reduce the amount payable in the remaining instalment(s) to align with a revised estimate of the specified sum and the advance tax payable on it, and pay the remaining instalment(s) accordingly.
Meaning of "specified sum" here
For this section, "specified sum" means the current income as estimated by the assessee.
Step-by-step flow for applying Section 406
- 1
Are you liable to advance tax under Section 404?
- No: Section 406 does not apply.
- Yes: Go to the next step. It does not matter whether you were assessed before.
- 2
Estimate your current income (the specified sum)
- 3
Compute advance tax under Section 405
- 4
Pay the appropriate percentage by each Section 408 due date
- 5
Has your estimate changed during the year?
- Yes: Increase or reduce the remaining instalments to match the revised estimate (Section 406(2)).
- No: Continue with the original instalments.
Practical checklist
Do
- Keep the estimate of current income and the advance-tax computation.
- Revisit the estimate as income changes and adjust remaining instalments by the statutory dates.
Avoid
- Do not use an old estimate without checking remaining instalments.
Illustrative example
Worked example: revising the estimate mid-year
Hypothetical facts (illustration only, not a real taxpayer): A trader estimates current income in June and pays the first instalment. In November he wins a large order and revises his estimate upward.
Initial estimate
He pays the June instalment on his own accord based on his first estimate.
Revision
Under Section 406(2), he raises the advance tax payable in the remaining instalments to match the new estimate.
Payment
He pays the higher amounts by the December and March due dates under Section 408.
Outcome
- His advance tax now matches his revised estimate.
- Any earlier shortfall can still attract interest under Section 425, so revising early helps.
Glossary
- Specified sum
- For Section 406, the current income as estimated by the assessee (Section 406(3)).
- On his own accord
- Payment by the assessee without waiting for an order from the Assessing Officer.
Frequently asked questions
Can an assessee change their advance tax instalment amounts mid-year?
Yes - Section 406(2) allows the amount payable in remaining instalments to be increased or reduced to match a revised estimate of current income.
What does "specified sum" mean for self-paid advance tax?
The current income as estimated by the assessee himself, under Section 406(3) - as opposed to figures from a prior regular assessment used under Section 407.
Can I reduce later instalments if my income falls?
Yes. Section 406(2) allows a person who has paid instalments to increase or reduce the remaining instalments to match the revised estimate of current income. Interest provisions for shortfalls may still apply if the final tax due is higher.
Need help applying this provision to your situation?
Get help estimating and paying your advance tax instalmentsLast updated 9 October 2026