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CS Executive · Tax Laws and Practice · Direct Tax at a Glance

Under section 407 of the Income-tax Act, 2025, Meera Traders was regularly assessed earlier. The Assessing Officer proposes to order advance tax on a specified sum. The latest regularly assessed total income is ₹18 lakh, and the total income returned for a later tax year is ₹22 lakh. Which statement is correct?

The specified sum is ₹22 lakh, because it is the higher of the regularly assessed income and the income returned for a later year. The order must be passed during the financial year but not later than the last day of February.

  1. AThe specified sum is ₹18 lakh, being the regularly assessed income
  2. BThe specified sum is ₹22 lakh, being the higher of the two, and the order must be passed not later than the last day of February of the financial yearCorrect
  3. CThe specified sum is ₹20 lakh, being the average of the two
  4. DThe specified sum is ₹22 lakh, and the order may be passed up to 31 March of the financial year

Explanation

Under section 407(3), the specified sum is the higher of the total income of the latest regularly assessed year and the total income returned for any subsequent tax year. Here the higher is ₹22 lakh. Section 407(2) allows the order to be passed during the financial year but not later than the last day of February, so a 31 March date is wrong, and no averaging applies.

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