Section 411 · Collection & recovery
Section 411 of the Income-tax Act, 2025 — When Tax Is Payable and When an Assessee Is Deemed in Default
By CA Rajat Agrawal
Updated 05 Jul 2026
Chapter XIX
📜 What the law says — Section 411, Income-tax Act 2025
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 specifi
In plain language
What Section 411 is all about
When the Income-tax Department computes your tax and issues a notice of demand under Section 289, Section 411 of the Income-tax Act, 2025 tells you three things: (a) by when you must pay, (b) what happens if you don't — the interest that piles up, and (c) when you are treated as an "assessee in default". It is the collection-and-recovery backbone that follows almost every assessment, TDS/TCS order, penalty order or rectification that creates a demand.
This section is the direct successor to Section 220 of the Income-tax Act, 1961. The substance is unchanged; only the numbering and drafting have been modernised. It is effective from 1 April 2026.
Who it applies to
- Every taxpayer — individuals, HUFs, firms, LLPs and companies — who receives a demand notice under Section 289.
- TDS deductors and TCS collectors, who become an "assessee in default" if they fail to deduct/collect or, having deducted/collected, fail to deposit the tax. The demand raised on them is then recovered under this same machinery.
- Any person against whom a demand arises out of assessment, reassessment, penalty, interest or appeal-effect orders.
The core rules — key conditions and limits
- 30-day payment window: The amount in a demand notice must ordinarily be paid within 30 days of service of the notice.
- Shorter window: The Assessing Officer (AO) can reduce the 30 days, but only with the prior approval of the Joint Commissioner, and only where allowing the full period would be detrimental to revenue (for example, flight risk or asset-stripping).
- Extension / instalments: Before the period expires, the AO may extend the time or allow payment in instalments, subject to conditions.
- Deemed in default: If the tax is not paid within the (original or extended) period, the assessee is deemed to be in default as to the whole of the amount then outstanding.
- Interest on default: Simple interest at 1% per month or part of a month runs from the day after the payment period ends until the date of actual payment. Even one day into a new month counts as a full month.
Relief you can claim
- Stay / not-in-default pending appeal: If you have filed an appeal under Section 356 or 357, the AO has discretion to treat you as not in default for the disputed amount while the appeal is pending — usually on payment of a part of the demand and subject to conditions.
- Foreign income that cannot be remitted: If part of your tax relates to income arising in a country whose laws prohibit or restrict remittance to India, the AO shall not treat you as in default on that portion until the money can be brought in.
- Waiver/reduction of interest: A senior authority (Principal Chief Commissioner / Chief Commissioner / Principal Commissioner / Commissioner) may reduce or waive the 1% interest where payment caused genuine hardship, the default was due to circumstances beyond your control, and you have co-operated in recovery proceedings.
How it interacts with related sections
- Section 289 creates the notice of demand — Section 411 governs its payment.
- Section 412 is the twin: it imposes a separate penalty when tax is in default, over and above the 1% interest here.
- Section 409 defines the broader circumstances in which a person (especially a TDS defaulter) is deemed to be in default.
- Sections 413 onwards give the department its recovery powers — Tax Recovery Officer, attachment, arrest — once you are in default.
Practical implications
The 1% monthly interest is non-negotiable arithmetic — it accrues automatically and is not the same as the interest under Sections 425/426 (equivalents of old 234A/B/C). If you disagree with a demand, do not simply ignore it: file your appeal and immediately apply to the AO for a stay treating you as not-in-default, typically offering to pay 20% of the disputed demand. Silence converts a disputed demand into an enforceable default, exposing you to penalty (Section 412) and coercive recovery.
💡 Example
Example 1 — Interest on a late-paid demand. Mr. Sharma is served a demand notice for ₹1,00,000 on 5 April 2026. The 30-day window ends on 5 May 2026. He actually pays on 20 July 2026. Interest under Section 411 runs from 6 May 2026 to 20 July 2026 — that spans May, June and part of July, i.e. 3 months (part of a month counts as a full month). Interest = ₹1,00,000 × 1% × 3 = ₹3,000. He must pay ₹1,03,000, and can also face a penalty under Section 412.
Example 2 — Stay pending appeal. Acme Pvt. Ltd. gets a ₹50,00,000 demand it believes is wrong and files an appeal under Section 356. It applies to the AO, who treats it as not-in-default on payment of 20% (₹10,00,000) and keeps the balance ₹40,00,000 in abeyance until the appeal is decided. No default, no 1% interest on the stayed ₹40 lakh during the stay — provided the conditions are met.
A relatable story. Priya, a freelance designer, received a ₹40,000 demand and assumed her CA would "handle it later." Four months passed. When she finally paid, the ₹40,000 had grown by ₹1,600 of interest (4 months × 1%), plus a notice threatening penalty and recovery. Had she either paid within 30 days or filed an appeal with a stay request, she would have avoided both the interest and the anxiety. The lesson of Section 411: a demand notice starts a clock — act inside 30 days.
| Situation | Section 411 rule | Amount / limit |
|---|
| Standard time to pay a demand notice (u/s 289) | Pay within 30 days of service | 30 days |
| Reduced payment period (revenue at risk) | AO may shorten, with prior approval of Joint Commissioner | Less than 30 days |
| Interest on non-payment after due period | Simple interest for every month or part of a month | 1% per month |
| Extension / instalments | AO may allow before period expires, on conditions | Discretionary |
| Disputed demand, appeal filed (u/s 356/357) | AO may treat as not-in-default; typical part-payment | Commonly 20% of demand |
| Tax on non-remittable foreign income | Shall not be treated as in default on that part | Full relief on blocked portion |
| Waiver / reduction of interest (genuine hardship) | By Pr.CCIT / CCIT / Pr.CIT / CIT | Full or partial waiver |
Related sections
Section 289 — Notice of demand Section 412 — Penalty payable when tax in default Section 409 — When assessee is deemed to be in default Section 410 — Credit for advance tax and TDS/TCS Section 425 — Interest for defaults in furnishing return / advance tax Section 413 — Recovery of tax by Tax Recovery Officer
Frequently asked questions
What is Section 411 of the Income-tax Act, 2025?
It sets out when tax raised in a demand notice (under Section 289) must be paid and when a taxpayer is treated as an 'assessee in default'. It is the 2025 Act's replacement for Section 220 of the Income-tax Act, 1961, effective 1 April 2026.
How many days do I get to pay a demand notice?
Ordinarily 30 days from the date the notice is served. The Assessing Officer can shorten this only with the Joint Commissioner's prior approval where the delay would be detrimental to revenue.
What interest applies if I don't pay on time?
Simple interest at 1% for every month or part of a month on the unpaid amount, running from the day after the payment period ends until you actually pay. Even a single day into a new month is charged as a full month.
Can I avoid being treated as in default if I dispute the demand?
Yes. If you file an appeal under Section 356 or 357, the AO can treat you as not-in-default for the disputed amount while the appeal is pending, usually on payment of a part (commonly 20%) and on conditions.
Does Section 411 apply to TDS/TCS defaulters?
Yes. A deductor or collector who fails to deduct/collect or to deposit the tax becomes an assessee in default, and the demand raised is recovered through this same machinery, with the 1% monthly interest and possible penalty.
Can the 1% interest ever be waived?
Yes. A senior authority (Pr.CCIT/CCIT/Pr.CIT/CIT) may reduce or waive it if paying caused genuine hardship, the default was due to circumstances beyond your control, and you co-operated in the recovery proceedings.
What is the difference between Section 411 and Section 412?
Section 411 fixes the payment timeline and the 1% default interest. Section 412 is a separate penalty the AO can levy on top, once you are actually in default.
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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