Section 406 · Collection & recovery
Section 406 of the Income-tax Act, 2025 — Payment of Advance Tax by the Assessee on His Own Accord
By CA Rajat Agrawal
Updated 05 Jul 2026
Chapter XIX
📜 What the law says — Section 406, 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, 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-sec-
tion (1), may increase or reduce the amount of advance tax payable in the remain-
ing 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.
Payment of advance tax by assessee in pursuance of order of Assessing Officer.
In plain language
What Section 406 says in plain English
Section 406 of the Income-tax Act, 2025 is the rule that makes you pay advance tax voluntarily — on your own, without waiting for the tax department to send a notice or demand. If your total tax liability for the year (after reducing TDS and TCS) is expected to be ₹10,000 or more, you are treated as "liable to advance tax" under Section 404, and Section 406 then obliges you to estimate your income and pay tax on it in instalments before the year ends.
This is a "pay-as-you-earn" system. Instead of paying all your tax in one lump at return-filing time, you pay it in pieces through the year on the income you are estimating. Section 406 is the successor to the old Section 210 of the Income-tax Act, 1961.
Who Section 406 applies to
- Every assessee liable under Section 404 — salaried employees with other income, freelancers, professionals, business owners, firms, LLPs, companies and non-residents.
- People whose advance tax liability is ₹10,000 or more for the tax year, computed after subtracting expected TDS/TCS and reliefs.
- Not applicable to a resident senior citizen (aged 60 or above) who has no income from business or profession — such a person is exempt from advance tax altogether.
The three key parts of Section 406
- Section 406(1) — the core duty: A person liable under Section 404 must, "on his own accord", pay advance tax on the specified sum at the appropriate percentage on or before each due date fixed under Section 408. No notice from the Assessing Officer is needed.
- Section 406(2) — flexibility to revise: If your income estimate changes during the year, you may increase or reduce the advance tax in the remaining instalments so that your payments match your revised income and the tax on it. This is a genuine convenience — your June estimate is not locked in.
- Section 406(3) — the definition: "Specified sum" means the current income as estimated by the assessee himself. You are trusted to make an honest estimate.
How Section 406 interacts with related sections
- Section 404 tells you whether you are liable (the ₹10,000 trigger). Section 406 tells you how to pay — voluntarily.
- Section 405 is the computation engine: estimate current income, apply the rates in force, then reduce TDS/TCS and reliefs to arrive at advance tax payable.
- Section 408 fixes the instalment dates and percentages — 15%, 45%, 75% and 100% by 15 June, 15 September, 15 December and 15 March.
- Section 407 is the opposite of 406: where you do NOT pay on your own, the Assessing Officer can pass an order demanding advance tax (based on your last assessed income). Section 406 is the "self-driven" route; Section 407 is the "AO-directed" route.
- Sections 424 and 425 (the successors to old Sections 234B and 234C) charge interest at 1% per month if you underpay or defer your instalments.
Practical implications for you
- You are your own tax collector. Nobody will remind you. Missing the deadlines silently triggers interest under Sections 424/425 even if you eventually pay in full.
- Estimate carefully but not fearfully. Because Section 406(2) lets you revise upward or downward each quarter, you can start with a reasonable estimate in June and true it up by December/March as your actual income becomes clearer.
- Presumptive taxpayers get a break. Assessees under the presumptive scheme (Section 58) pay 100% in a single instalment by 15 March under Section 408(2).
- Pay online using Challan ITNS 280 (e-pay tax on the income-tax portal) under the "Advance Tax" head, quoting the correct tax year.
💡 Example
Worked example 1 — a salaried professional with side income. Ms. Kavya (age 34) is salaried; her employer deducts TDS on salary. She also earns ₹6,00,000 from freelance consulting in TY 2026-27 on which no TDS is deducted. Estimated tax on the freelance income (after slab and cess) is ₹1,20,000 — well above the ₹10,000 trigger of Section 404, so Section 406 applies. She must pay on her own accord: ₹18,000 (15%) by 15 June, cumulative ₹54,000 (45%) by 15 September, ₹90,000 (75%) by 15 December, and the full ₹1,20,000 (100%) by 15 March. She pays each instalment via challan without any notice.
Worked example 2 — revising the estimate under 406(2). In June, Mr. Arjun estimates his business income will give a tax of ₹2,00,000, so he pays ₹30,000 (15%). By September a big contract falls through and his revised tax estimate drops to ₹1,00,000. Using Section 406(2), he recalculates: 45% of ₹1,00,000 is ₹45,000, and he has already paid ₹30,000, so he now pays only ₹15,000 in the second instalment instead of a larger sum. The law expressly lets him reduce later instalments to match reality.
A relatable story. Ramesh, a first-time freelancer, always thought "the department will tell me what to pay." In his first year he waited — no letter ever came. When he filed his return, he discovered he owed ₹85,000 plus interest under Sections 424 and 425 for not paying advance tax through the year. His CA explained: under Section 406 the duty is "on your own accord" — the silence was not a reprieve, it was the system working exactly as designed. The next year Ramesh set four calendar reminders for the 15th of June, September, December and March, and never paid interest again.
| Instalment | Due date | Cumulative advance tax payable | Governing section |
|---|
| First | 15 June | Not less than 15% | 406 read with 408 |
| Second | 15 September | Not less than 45% | 406 read with 408 |
| Third | 15 December | Not less than 75% | 406 read with 408 |
| Fourth | 15 March | 100% | 406 read with 408 |
| Presumptive (Sec 58) | 15 March | 100% in a single instalment | 408(2) |
Related sections
Section 404 — Liability to pay advance tax (₹10,000 trigger) Section 405 — Computation of advance tax Section 407 — Advance tax in pursuance of order of the Assessing Officer Section 408 — Instalments of advance tax and due dates Section 424 — Interest for default in payment of advance tax Section 425 — Interest for deferment of advance tax instalments
Frequently asked questions
Will the Income-tax Department send me a notice to pay advance tax under Section 406?
No. Section 406 is a self-driven, voluntary obligation — you must estimate and pay on your own accord without any notice or demand. A notice comes only under the separate route of Section 407, where the Assessing Officer orders payment.
What is the minimum tax at which Section 406 applies?
Section 406 applies once you are liable under Section 404, which is when your estimated tax for the year (after reducing TDS and TCS) is ₹10,000 or more.
Can I change my advance tax amount after the first instalment?
Yes. Section 406(2) expressly lets you increase or reduce the amount in the remaining instalments to match your revised income estimate and the tax on it, so your June estimate is not final.
What does 'specified sum' mean in Section 406?
Under Section 406(3), 'specified sum' means the current income as estimated by you, the assessee — it is your own honest estimate of income for the year, not a fixed figure set by the department.
Are senior citizens required to pay advance tax under Section 406?
A resident senior citizen aged 60 or above with no income from business or profession is exempt from advance tax entirely. Senior citizens who do have business or professional income remain liable.
What happens if I don't pay advance tax on my own accord?
You will attract interest at 1% per month under Section 424 (if you pay less than 90% of the assessed tax) and Section 425 (for deferring individual instalments), and the Assessing Officer may act under Section 407.
How do presumptive taxpayers pay advance tax under this scheme?
Taxpayers under the presumptive scheme (Section 58) pay 100% of their advance tax in a single instalment on or before 15 March, as provided in Section 408(2).
C
CA Rajat Agrawal
Chartered Accountant, EaseValue · Reviewed 05 Jul 2026
This explainer is prepared and reviewed by EaseValue's tax team, based on the text of the Income-tax Act, 2025 (as amended by the Finance Act, 2026).
Disclaimer: This page explains the law in general terms for education and is not professional advice. The Income-tax Act, 2025 takes effect from 1 April 2026; provisions, thresholds and interpretations may change. Please confirm your specific position with our team before acting.
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