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CMA Intermediate · Direct and Indirect Taxation · Self-Assessment and Intimation

Mehta & Sons received an order under section 407 of the Income-tax Act, 2025 requiring advance tax of Rs 4,00,000 for the year. It estimates its own advance tax on current income at only Rs 2,50,000. Which step is permitted by the Act?

A person served with an order who estimates lower advance tax may send an intimation in the prescribed form to the Assessing Officer. He then pays advance tax per his own estimate on each instalment due date falling after the intimation.

  1. AIgnore the order, as the Assessing Officer's estimate cannot be altered
  2. BIntimate the Assessing Officer in the prescribed form and pay advance tax per its own lower estimate on instalments falling after the intimationCorrect
  3. CPay Rs 4,00,000 and claim refund of the excess before the first instalment
  4. DPay the lower amount only on the due date of the last instalment

Explanation

Section 407(8) lets a person who estimates lower advance tax send an intimation in the prescribed form and pay as per that estimate on instalments due after the intimation. Ignoring the order is not provided for, and payment only at the last instalment is not the rule for a lower estimate.

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