Procedural Compliance under Income Tax: formula sheet

Key formulas

Who must apply for PAN (income)

Total income > maximum amount not chargeable to tax in a tax year

Section 262(1)(a). Applies to your income or the income of another person you are assessable for.

Who must apply for PAN (business)

Sales, turnover or gross receipts > ₹5,00,000 in a tax year (actual or likely)

Section 262(1)(b). Covers business or profession. The word 'likely' matters.

Resident non-individual

Financial transactions aggregating to ₹2,50,000 or more in a tax year

Section 262(1)(d). Note 'or more', unlike the ₹5,00,000 test which says 'exceed'. Directors, partners, trustees and similar persons of such an entity must also apply (clause (e)).

One person, one PAN

Already allotted PAN → cannot apply for, obtain or possess another

Section 262(8).

Where PAN must be quoted

Returns + correspondence with income-tax authority + challans (section 262(3)); prescribed transactions (section 262(9))

Aadhaar may be quoted in lieu in the cases in section 262(7).

Penalty

₹10,000 under section 467

Default in complying with section 262 (467(1)); false number quoted knowingly (467(2)), failure to quote or authenticate (467(3)), or failure of the receiver to ensure correct quoting (467(4)) are ₹10,000 for each such default.

Due date: transfer pricing report cases

Where section 172 applies: 30 November (of the financial year after the tax year)

Applies to the assessee, including partners of the firm and the spouse of such partner if section 10 applies to the spouse.

Due date: company or audit cases

Company, audited assessee (other than company), audited firm's partner or spouse (section 172 not applicable): 31 October

Audit may be required under the Act or under any other law.

Due date: business, not audited

Business or profession income, accounts not audited, and partner of a non-audited firm or spouse (section 172 not applicable): 31 August

This 31 August category was introduced by the substitution effective 1 April 2026.

Due date: any other assessee

31 July

For example, a salaried individual with no business income.

Belated return

Within 9 months from the end of the tax year, or before completion of assessment, whichever is earlier

Section 263(4). Applies when you missed the due date.

Revised return

Within 12 months from the end of the tax year, or before completion of assessment, whichever is earlier

Section 263(5), subject to section 428(b). Earlier limit was 9 months.

Updated return

Within 48 months from the end of the financial year succeeding the tax year

Section 263(6). Cannot be filed in the cases barred by 263(6)(c) and (d).

Defective return

15 days from intimation to rectify, extendable on application

Section 263(7). Otherwise the return is invalid.

Business limit (basic)

Total sales, turnover or gross receipts in business > ₹1,00,00,000

Audit is needed only if the limit is exceeded. Exactly ₹1 crore does not attract audit.

Business limit (enhanced)

₹10,00,00,000 applies if cash receipts ≤ 5% of total receipts AND cash payments ≤ 5% of total payments

Both cash tests must be met. Failing either one brings back the ₹1 crore limit.

Profession limit

Gross receipts in profession > ₹50,00,000

The cash-based enhancement applies to business only, not to profession.

Presumptive case

Profit claimed < deemed profit under section 58(2) or 61(2) → audit required

If profit declared is as per those sections, section 63 does not apply.

Specified date

Specified date = one month before the due date for the return under section 263(1)

The audit report must be furnished by this date.

Cash deeming rule

Non-account-payee cheque or bank draft = cash

Counts for both receipts and payments in the 5% tests.

Fee for default

Section 428(c): ₹75,000 for delay up to one month; ₹1,50,000 thereafter

Payable if you fail to get accounts audited and furnish the report as required by section 63.

Modes of payment (section 390)

Tax = deduction/collection at source + advance payment + payment under section 392(2)(a)

Applies irrespective of the fact that assessment is made in a later tax year.

Advance tax instalments (section 408(1))

15 June: not less than 15% | 15 September: not less than 45% | 15 December: not less than 75% | 15 March: 100%

Each figure is cumulative. Reduce it by amounts already paid in earlier instalments.

Presumptive assessees (section 408(2))

Whole advance tax on or before 15 March

Applies to an assessee declaring profits under section 58(2) (Table: Sl. No. 1 or 3).

Tax paid up to 31 March (section 408(3))

Advance tax paid on or before 31 March counts for the financial year ending that day

Use it to place a late-March payment in the correct year.

Interest on deferment (section 425(1))

Interest = shortfall × 3% (June, September, December instalments); shortfall × 1% (March instalment)

Shortfall = required cumulative percentage of tax due on returned income, minus advance tax paid by that date.

Safe harbour (section 425(2))

No interest if paid by 15 June ≥ 12% and by 15 September ≥ 36% of tax due on returned income

The relief covers only the June and September instalments.

Presumptive assessee interest (section 425(3))

Simple interest = 1% × (tax due on returned income − advance tax paid by 15 March)

For assessees under section 58(2) (Sl. No. 1 or 3), or where advance tax paid by 15 March falls short.

Tax due on returned income (section 425(5))

Tax on total income declared in the return − TDS/TCS on income included − reliefs under sections 157, 159(1), 159(2), 160 − specified tax credits

Always deduct TDS/TCS before applying the percentages.

No interest on unforeseen income (section 425(4))

No interest on shortfall caused by under-estimating capital gains, section 2(49)(n) income, first-time business income or dividend, if the tax is paid in later instalments or by 31 March

Both conditions must be met: the shortfall arises from that income, and the tax on it is paid in full later.

Self-assessment tax (section 266(1))

Balance tax + interest + fee, paid before filing the return

The return must carry proof of payment.

Order of adjustment (section 266(3))

Short payment is adjusted first to fee, then interest, then tax

Shows why a short payment can leave tax itself unpaid.

Best judgment assessment: triggers

Section 271(1): failure to file return under 263(1), (4), (5) or (6) OR non-compliance with notice under 268(1) or direction under 268(5) OR non-compliance with notice under 270(8) after filing a return

The AO must consider all relevant material and give you an opportunity of being heard.

Show-cause notice before best judgment

Section 271(2): show-cause notice on a stated date and time; Section 271(3): not needed if a notice under 268(1) was already issued

A common trap: the exception applies only where a 268(1) notice has been issued before the assessment.

Rectification: scope

Section 287(1): mistake apparent from the record; orders, intimations under 270(1) and intimations under 399

Section 287(2): matters considered and decided in appeal or revision cannot be amended.

Rectification: who can start it

Section 287(3): the authority may act on its own motion and must act on a mistake brought to notice by the assessee, deductor or collector

Where the authority is the JCIT(A) or CIT(A), the AO can also bring the mistake to notice.

Rectification: adverse amendment

Section 287(4): notice of intention plus reasonable opportunity of being heard; Section 287(5): order in writing

Applies to amendments that enhance assessment, reduce refund or increase liability.

Rectification: time limits

Section 287(8): no amendment after 4 years from the end of the financial year in which the order or intimation was passed; Section 287(9): order within 6 months from the end of the month of receiving the application

Section 287(8) is subject to section 288, so mention that exception.

Consequences of rectification

Section 287(6): refund if liability reduced; Section 287(7): notice of demand (deemed under section 289) if liability increased

Refund is due to the assessee, deductor or collector.

Valuation Officer reference

Section 269: report within 6 months from the end of the month of reference; AO uses it after hearing the assessee

The reference may be made whether or not the AO doubts the accounts.

Tribunal rectification

Section 363(2): within 6 months from the end of the month of the order; fee ₹50 under section 363(4)

Adverse amendments need a reasonable opportunity of being heard.

Appeal to High Court (section 365)

Lies from every Tribunal order, if the High Court is satisfied that a substantial question of law is involved

The High Court formulates the question and hears the appeal on that question. For reasons recorded, it may hear another substantial question of law it finds involved.

Time limit for High Court appeal

120 days from the date the order appealed against is received

Applies to both the assessee and the department. The High Court may admit a late appeal if there was sufficient cause.

Revision: own motion (section 378)

Not allowed if the order was made more than 1 year earlier

The one year runs from the date the order was made.

Revision: assessee's application

Within 1 year from the date the order was communicated, or the date the assessee otherwise came to know of it, whichever is earlier

Late application may be admitted if sufficient cause is shown. Fee: Rs. 500.

Order on a revision application

Within 1 year from the end of the financial year in which the application is made

Certain periods are excluded, such as a court stay. The remaining time is extended to 60 days if it falls below that.

Bar on revision

No revision if an appeal lies but has not been made and the time has not expired; or the order is under appeal

Revision cannot be used while the appeal route is open or in use. An order declining to interfere is not prejudicial to the assessee.

Departmental appeal on identical question (section 376)

Appeal against the final decision's non-conformity: 60 days to the Tribunal or 120 days to the High Court from communication of the decision in the other case

Applies where the order is not in conformity with the final decision on the question of law in the other case.

Interest vs penalty vs prosecution

Interest = compensation | Penalty = money punishment by authority | Prosecution = criminal trial in court

Use this one line to open any theory answer on the difference between the three.

Waiver of penalty for voluntary disclosure (s. 469(1))

Penalty under s. 439 may be reduced or waived if (a) full and true disclosure was made voluntarily and in good faith before the AO detected the concealment or inaccuracy, AND (b) the person cooperated in the enquiry and paid, or made satisfactory arrangements to pay, the tax and interest due

Both conditions must be met. The power rests with the Principal Commissioner or Commissioner, at his discretion.

Deemed full and true disclosure (s. 469(2))

Deemed disclosure if the difference between assessed and returned income does not attract penalty under s. 439

This is a deeming rule that helps the assessee satisfy condition (a).

Prior approval for large waiver (s. 469(3))

Income involved (or aggregate over several tax years) > ₹5,00,000 → prior approval of Principal Chief Commissioner / Chief Commissioner / Principal Director General / Director General

At ₹5,00,000 exactly, approval is not needed. It is needed only when the amount exceeds ₹5,00,000.

One-time relief (s. 469(4))

Once an order is made under s. 469(1), no relief under s. 469 for any other tax year later

The order may cover one or more tax years, but relief is available only once.

Hardship relief (s. 469(5)-(8))

On application and with recorded reasons: reduce or waive penalty, or stay or compound recovery, if (a) otherwise genuine hardship AND (b) assessee cooperated. Aggregate > ₹1,00,000 → prior approval. Order within 12 months from end of the month of application. No rejection without hearing.

Note the different threshold of ₹1,00,000 here, against ₹5,00,000 in sub-section (3).

Finality of orders (s. 469(9))

Every order under s. 469 is final and cannot be questioned by any court or other authority

A common one-line theory question.

Immunity from prosecution (s. 519)

Central Government, for reasons recorded in writing, may tender immunity from prosecution (under this Act, the Bharatiya Nyaya Sanhita, 2023 or any other Central Act) and from penalty, on condition of full and true disclosure, to obtain evidence of a person concerned in concealment or evasion

Immunity is withdrawn if the person does not comply with conditions, wilfully conceals anything or gives false evidence. He may then be tried and penalised.

Refund claimant (section 432(1))

Income of A included in total income of B → only B can claim the refund on that income

Applies where any provision of the Act includes one person's income in another's total income.

Refund on incapacity (section 432(2))

Death, incapacity, insolvency, liquidation or other cause → legal representative / trustee / guardian / receiver claims

The claim is for the benefit of the person or the estate.

Eligible assessee (section 275(17))

(i) variation arises from the Transfer Pricing Officer's order under section 166(6); or (ii) any non-resident (not a company) or any foreign company

Persons under section 292(1) and section 295 are excluded (section 275(18)).

Panel timeline: assessee's response

Draft order received → within 30 days: accept, or file objections with the Panel and the Assessing Officer

If the assessee accepts or does not object in time, the Assessing Officer completes the assessment on the draft order (section 275(3)).

Panel timeline: directions and final order

Directions: not after 9 months from the end of the month in which the draft order is forwarded. Assessing Officer's order: within 1 month from the end of the month in which the directions are received

Sections 275(13) and 275(14). Directions bind the Assessing Officer (section 275(11)). If the assessee accepts or does not object, the order is due within 1 month from the end of the month of acceptance or of expiry of the objection period (section 275(4)).

Panel's powers

May confirm, reduce or enhance the variations; may not set aside any variation or direct further enquiry and a fresh order

Section 275(8). Enhancement can cover matters not raised by the assessee (section 275(9)). The assessee and the Assessing Officer must be heard before directions that are prejudicial to them (section 275(12)).

Specified order for the Committee (section 379(4))

Aggregate variations ≤ ₹10 lakh; not based on search, requisition, survey or agreement information; return total income, if filed, ≤ ₹50 lakh

All conditions apply, along with the Board's specification of the order.

Committee: Assessing Officer's follow-up

Within 1 month from the end of the month in which the Committee's order is received

Section 379(3): pass the assessment order if the specified order was a draft, otherwise modify the existing order.

Quick revision

• Use the term tax year, not previous year or assessment year.
• Section 63 audit for business: total sales, turnover or gross receipts above ₹1 crore in the tax year.
• The business limit becomes ₹10 crore if cash receipts and cash payments are each not more than 5% of the totals.
• Section 63 audit for profession: gross receipts above ₹50 lakh in the tax year.
• Audit also applies where profits are claimed lower than deemed profits under section 58(2) or 61(2) (Sl. Nos. 4 and 5 in the Table).
• Section 63(2): no audit under this section if profits are declared as per section 58(2) or 61(2).
• Specified date for audit: one month before the return due date under section 263(1).
• A non-account payee cheque or draft counts as cash for the 5% test.
• If another law requires audit, auditing under that law by the specified date and furnishing both reports meets section 63.
• The audit report must be signed and verified by the accountant in the prescribed form and furnished by the specified date.
• The Board makes rules under section 533 with Central Government control; rules can have retrospective effect only from the Act's commencement and not to prejudice assessees.
• Answer format: provision, facts, conclusion, section cited.

Common mistakes

• Applying the ₹5,00,000 limit to total income instead of turnover. Fix: Turnover, sales or gross receipts of ₹5,00,000 relate to business or profession. For income, the test is the maximum amount not chargeable to tax.
• Saying a company needs PAN only if it earns income above the exemption limit. Fix: A resident non-individual must also apply if its financial transactions total ₹2,50,000 or more in a tax year, and its directors and office-bearers are covered too.
• Saying the return is for the previous year instead of the tax year. Fix: Use tax year for June 2027. Mention the old terms only to contrast.
• Using 31 October for every audited or company case. Fix: Check section 172 first, then apply the 31 October row.
• Applying the ₹10 crore limit when only one cash test is met. Fix: Always compute both percentages. If either exceeds 5%, the limit stays at ₹1 crore.
• Applying the ₹10 crore enhancement to a professional. Fix: The enhancement is in the business clause only. A professional's limit is ₹50 lakh of gross receipts.
• Applying the percentages to total tax instead of tax after TDS and credits Fix: Always subtract TDS, TCS and listed reliefs first, then take 15%, 45%, 75% and 100%.
• Treating instalment percentages as separate payments Fix: The percentages are cumulative. Reduce each by the amount paid earlier.
• Treating best judgment assessment as an arbitrary guess. Fix: Say the AO must take all relevant material into account and give the assessee an opportunity of being heard.
• Saying a show-cause notice is always required before best judgment assessment. Fix: Add that it is not needed if a notice under section 268(1) was issued before the assessment.

Exam tips

• Learn the six conditions of section 262(1) as a list. Case questions usually test one or two of them.
• Keep the two thresholds separate: ₹5,00,000 (business turnover, 'exceed') and ₹2,50,000 (resident non-individual transactions, 'or more').
• In answers, cite the section and sub-section, for example 262(8) or 467(3). It shows precision.
• If asked for the difference between PAN and TAN, give purpose, who needs it and where it is quoted, in a short two-column style list.
• Use the Income-tax Act, 2025 section numbers only. Do not quote old section numbers from the 1961 Act.
• Start your answer with section 263 and name the person category before stating the date.
• Learn the four due dates with their conditions as a small table in your notes. Examiners often give a company, an audited firm and a salaried person in one question.
• Always compute the time limits from the end of the tax year. Show the working in dates.