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CMA Intermediate · Direct and Indirect Taxation · Advance Tax

Mr. Ramesh Iyer, a resident aged 45 with business income, has paid the first two instalments of advance tax on his own accord based on an estimate. In the third quarter he finds that his current income will be much lower. Which statement follows from section 406?

He may reduce the advance tax in the remaining instalments. Section 406(2) lets a person who has paid any instalment increase or reduce later instalments to match the revised estimate of current income, in either direction and without needing the Assessing Officer's permission.

  1. AHe may reduce the advance tax payable in the remaining instalments to accord with the revised specified sumCorrect
  2. BHe cannot revise the amount once any instalment has been paid
  3. CHe may revise only upward, not downward
  4. DHe must obtain the Assessing Officer's permission before revising

Explanation

Section 406(2) allows a person who has paid any instalment to increase or reduce the tax payable in the remaining instalments to accord with the specified sum. No permission is required, and revision is allowed in both directions.

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