Section 407 · Collection & recovery
Section 407 of the Income-tax Act, 2025 — Payment of Advance Tax in Pursuance of an Order of the Assessing Officer
By CA Rajat Agrawal
Updated 05 Jul 2026
Chapter XIX
📜 What the law says — Section 407, Income-tax Act 2025
407. (1) Where a person has already been assessed for the total income of any tax
year by way of regular assessment and the Assessing Officer is of the opinion
that such person is liable to pay advance tax, he may require such person to pay
advance tax on the specified sum, calculated in the manner laid down in section
405, by an order in writing, specifying the instalment or instalments in which such
tax is to be paid, on or before the due date of each instalment specified in section
408.
(2) The order referred to in sub-section (1) may be passed at any time during the
financial year but not later than the last day of February of such financial year and
it shall be followed by issuance of notice of demand under section 289.
(3) In sub-section (1), “specified sum” means a sum, being higher of,—
(a) the total income of the latest tax year in respect of which the assessee
has been assessed by way of regular assessment; or
(b) total income returned by the assessee in any return of income furnished
by him for any subsequent tax year.
(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 or
In plain language
What Section 407 is about
Most taxpayers pay advance tax voluntarily on their own estimate. Section 407 of the Income-tax Act, 2025 deals with the far less common situation where the Assessing Officer (AO) himself steps in and orders you to pay advance tax. It is the direct successor to Section 210(3) to 210(6) of the old Income-tax Act, 1961, and applies from the tax year beginning 1 April 2026.
In plain words: if you have already been assessed once (a completed regular assessment) and the AO believes you are liable to pay advance tax for the current year but have not, the AO can issue a written order telling you how much advance tax to pay and in which instalments.
Who it applies to
- Only persons already assessed by regular assessment. The AO cannot use Section 407 against a brand-new taxpayer who has never been assessed. There must be a prior completed assessment on record.
- Persons the AO believes are liable to advance tax under the normal rules (advance tax liability arises when tax payable is ₹10,000 or more in a year, after TDS/TCS credit).
- Typically used where a taxpayer with a known past income appears to be under-paying or ignoring advance tax during the year.
Key conditions and limits
- Timing of the order: The AO may pass the order at any time during the financial year, but not later than the last day of February of that financial year. An amended order (see below) can go up to 1 March.
- The "specified sum": The advance tax is computed on the higher of (a) the total income of the latest completed regular assessment, or (b) the total income returned by you in any later return of income. This ensures the demand reflects the most recent income picture.
- Computation method: The tax is calculated in the manner laid down in Section 405 (computation of advance tax) and is payable in the instalments and by the due dates in Section 408.
- Notice of demand: The order must be followed by a notice of demand under Section 289. The order alone is not the enforceable demand — the Section 289 notice is.
Power to amend the order
If, after passing the order, you file a later return or a fresh/revised assessment is made showing a different income, the AO can amend the order to increase or reduce the advance tax. Such an amended order can be passed up to 1 March of the financial year and is again followed by a fresh notice of demand.
Your right to pay a lower amount (the escape valve)
Section 407 is not a one-way street. If you genuinely believe your current year income (and hence advance tax) is lower than what the AO's order specifies, you are not forced to over-pay. You may:
- Send an intimation to the AO in the prescribed form (Form 152 on the e-filing portal) stating your own lower estimate; and
- Pay advance tax on that lower estimate, computed under Section 405, in the instalments under Section 408 falling after the date of the intimation.
Conversely, if your current income turns out to be higher than the AO's figure, you must pay the higher advance tax by the last instalment date — you cannot hide behind the AO's lower order.
What happens if the notice arrives late
If the notice of demand is served after some instalment due dates have already passed, the advance tax becomes payable only from the instalment due dates falling on or after the date of service. You are not penalised for instalments that were already gone before you were even told.
How it interacts with other sections
- Section 405 supplies the computation formula for the advance tax amount.
- Section 408 supplies the instalment percentages and due dates (15 June, 15 September, 15 December, 15 March).
- Section 289 is the notice of demand that makes the order enforceable.
- Section 409 treats you as an assessee in default if you fail to pay in accordance with the order.
- Sections 425/426 (interest) — failure/shortfall in advance tax can attract interest for deferment and shortfall, the successors to old Sections 234B and 234C.
Practical implications
- A Section 407 order is a signal that the department is watching your advance-tax behaviour. Do not ignore it.
- Always compare the AO's demand with your own honest estimate. If yours is genuinely lower, file Form 152 rather than silently under-paying — the intimation is your legal protection.
- Keep proof of the date the Section 289 notice was served — it fixes which instalments you actually owe.
- Even after an AO order, the final responsibility to pay the correct advance tax (if your real income is higher) stays with you.
💡 Example
Worked example 1 — AO order based on past assessment. Mr. Sharma was last assessed on a total income of ₹40,00,000 for AY 2025-26. During FY 2026-27 he pays no advance tax. In January 2027 the AO forms the opinion that he is liable and passes a Section 407 order on the "specified sum" of ₹40,00,000, computing advance tax under Section 405 at (say) ₹9,50,000 after rebate/TDS. The order is served with a Section 289 notice on 20 January 2027. Since the 15 June, 15 September and 15 December instalments have passed, Mr. Sharma must pay the full ₹9,50,000 by the last instalment date, 15 March 2027.
Worked example 2 — taxpayer's lower estimate (Form 152). Suppose Mr. Sharma's business slumped and his current-year income is only ₹22,00,000, on which advance tax works out to ₹4,80,000. He is not bound by the AO's ₹9,50,000 figure. He files Form 152 intimating his lower estimate and pays ₹4,80,000 across the remaining instalment(s) after the intimation date. If, however, his income turns out to be ₹55,00,000, he must pay the higher advance tax by 15 March, not the AO's lower ₹9,50,000.
A relatable story. Priya, a freelance architect, was assessed two years ago on ₹18 lakh. This year she got busy on-site and forgot about advance tax entirely. In February her AO sent a written order under Section 407 with a demand notice asking her to pay advance tax based on that ₹18 lakh. Priya panicked — but her CA explained she had two clean choices: pay as ordered, or, because her current year was actually leaner, file Form 152 with an honest lower estimate and pay only that. She filed Form 152, paid the correct lower amount, and avoided both the over-payment and a default under Section 409.
| Aspect | Position under Section 407, Income-tax Act 2025 |
|---|
| Who can be ordered | Only a person already assessed by regular assessment whom the AO believes is liable to advance tax |
| Last date to pass order | Last day of February of the financial year (amended order up to 1 March) |
| "Specified sum" (income base) | Higher of latest regularly assessed income OR income returned in any later return |
| Computation of tax | As per Section 405 |
| Instalments & due dates | As per Section 408 (15 Jun 15%, 15 Sep 45%, 15 Dec 75%, 15 Mar 100%) |
| Enforcement | Notice of demand under Section 289 |
| Taxpayer's lower estimate | Permitted — file intimation in Form 152; pay on own lower estimate for instalments after intimation |
| If actual income is higher | Must pay higher advance tax by the last instalment (15 March) |
| Notice served late | Only instalments due on/after service date are payable |
| Old-law equivalent | Section 210(3) to 210(6), Income-tax Act 1961 |
Related sections
Section 405 — Computation of advance tax Section 408 — Instalments and due dates of advance tax Section 409 — When assessee is deemed to be in default in advance tax Section 289 — Notice of demand Section 425 — Interest for defaults in payment of advance tax Section 426 — Interest for deferment of advance tax instalments
Frequently asked questions
Can the Assessing Officer force me to pay advance tax if I have never been assessed before?
No. Section 407 applies only to a person who has already been assessed by way of a regular assessment. Without a prior completed assessment, the AO cannot pass an order under this section.
What is the last date by which the AO can pass a Section 407 order?
The order can be passed any time during the financial year but not later than the last day of February. An amended order (after a later return or fresh assessment) can be passed up to 1 March of that financial year.
The AO's demand looks too high because my income has fallen this year. Do I have to pay it?
No. If your current-year advance tax is genuinely lower, you can file an intimation in the prescribed Form 152 with your own lower estimate and pay accordingly for the instalments falling after the intimation date.
What income figure does the AO use to compute the advance tax?
The 'specified sum' is the higher of the total income of your latest regular assessment or the total income you returned in any later return of income, with tax computed under Section 405.
What if the demand notice reaches me after some instalment dates are already over?
You are liable to pay only the instalments that fall due on or after the date the Section 289 notice of demand is served on you. Instalments that had already passed before service are not demanded.
What happens if I ignore a Section 407 order?
If you do not pay in accordance with the order, you can be treated as an assessee in default under Section 409, and interest for advance-tax defaults (Sections 425/426) may also apply.
Which form do I file to intimate a lower advance-tax estimate?
Form 152 is filed on the income-tax e-filing portal to intimate your lower estimate in response to an order/demand under Section 407(2) or 407(5) read with the notice of demand under Section 289.
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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