TaxTMI 
TaxTMI 
TaxTMI 
Analyzing the Deeming Provisions for Advance Tax Default : Clause 409 of the Income Tax Bill, 2025 vs. Section 218 of the Income-tax Act, 1961
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....sed clause must be analyzed in the context of the existing legal regime, particularly Section 218 of the Income Tax Act, 1961, which presently governs the circumstances under which an assessee is deemed to be in default for non-payment or short payment of advance tax. The evolution from Section 218 to Clause 409 reflects both legislative intent to modernize tax administration and to address ambiguities or operational challenges experienced under the previous regime. This commentary will dissect Clause 409, elucidate its objectives, analyze its provisions with reference to legal principles and practical realities, and compare it comprehensively with Section 218 of the 1961 Act. Objective and Purpose The primary objective of both Section 21....
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....er u/s 407(1) and (4); or (b) does not send to the Assessing Officer an intimation u/s 407(8) on or before the date on which any such instalment as is not paid becomes due; or (c) does not pay on the basis of his estimate of his current income, the advance tax payable by him u/s 407(9), in respect of such instalments." To understand the full import of Clause 409, it is necessary to analyze each limb of the provision in the context of the overall scheme of advance tax under the Bill. (a) Default in Payment of Advance Tax as per Assessing Officer's Order Clause 409(a) targets situations where the assessee fails to pay the advance tax instalment specified in an order by the Assessing Officer u/s 407(1) and (4), by the due date specified....
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....rmed of any deviations from the original estimates, allowing them to monitor compliance and adjust their records accordingly. Failure to comply with this procedural requirement is treated as a default, underscoring the importance of transparency and communication in tax administration. (c) Default in Payment Based on Self-Assessment Clause 409(c) covers cases where the assessee, having estimated their current income, fails to pay the advance tax accordingly u/s 407(9). This provision recognizes the principle of self-assessment, which is a hallmark of modern tax systems. Taxpayers are expected to take responsibility for accurately estimating their income and paying the corresponding advance tax. The deeming provision ensures that taxpayer....
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....the provision. Practical Implications Clause 409 has significant practical implications for various stakeholders: * Taxpayers: They must exercise greater diligence in estimating their advance tax liability, comply with procedural requirements for intimating changes, and ensure timely payment of instalments. Non-compliance can lead to being deemed in default, triggering interest, penalties, and recovery proceedings. * Tax authorities: The provision empowers the authorities to enforce compliance more effectively and to initiate recovery proceedings without delay. It also facilitates better monitoring of advance tax collections. * Advisors and professionals: They must advise clients on the importance of complying with both substantive ....
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....lf-estimate. The language and intent are substantially aligned, reflecting continuity in legislative policy. Differences in Drafting and Approach * Clarity and Segmentation: Clause 409 explicitly enumerates the three triggers in separate sub-clauses (a), (b), and (c), whereas Section 218 combines them into a single, compound sentence. The new drafting enhances clarity and reduces the risk of interpretational confusion. * Reference to Corresponding Provisions: The cross-references in Clause 409 (to sections 407(1), (4), (8), (9)) correspond to those in Section 218 (section 210(3), (4), (5), (6)) but reflect the renumbering and possible restructuring in the new Bill. * Procedural Modernization: The new provision may be supported by up....
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.... Income Tax Bill, 2025, represents a continuation and refinement of the existing framework under Section 218 of the Income Tax Act, 1961, for deeming an assessee in default for failure to comply with advance tax obligations. The provision is central to the effective administration of advance tax, ensuring that taxpayers remain compliant, that the exchequer's interests are protected, and that the machinery for tax collection operates smoothly. The new drafting in Clause 409 enhances clarity, segments the triggers for default, and aligns with contemporary legislative drafting standards. Substantively, the legal position remains unchanged, but the new provision may be supported by modernized procedures and enforcement mechanisms. For ....