Sections 218 and 219 of Income Tax Act: Advance Tax Default and Credit

Sections 218 and 219 of the Income Tax Act, 1961 formed part of the statutory scheme for collection and recovery of advance tax. Section 218 specified when an assessee was deemed to be in default for an advance-tax instalment, while Section 219 ensured that qualifying advance tax paid or recovered was credited against tax on the relevant income.

Current law from 1 April 2026: The Income Tax Act, 2025 is in force from 1 April 2026. The corresponding provisions are Section 409, dealing with when an assessee is deemed to be in default, and Section 410, dealing with credit for advance tax. Sections 218 and 219 of the 1961 Act remain relevant for matters governed by the repealed enactment under the applicable transition and saving provisions.

Section 218 - When assessee deemed to be in default

Under Section 218 of the Income Tax Act, 1961, an assessee could be deemed to be in default in respect of an advance-tax instalment where the assessee failed to pay an instalment required by an Assessing Officer's order under Section 210 and also failed to take the steps prescribed by that section for revising or communicating the assessee's estimate of current income and advance-tax liability.

In substance, the provision linked default to failure to comply with the statutory advance-tax payment mechanism. The section referred to the due dates under Section 211 and to the order, intimation and estimate provisions then contained in Section 210.

Section 219 - Credit for advance tax

Section 219 provided that any sum, other than penalty or interest, paid by or recovered from an assessee as advance tax under the relevant Chapter was to be treated as payment of tax in respect of the income of the corresponding previous year. Credit for that advance tax was required to be given to the assessee in the regular assessment.

The practical purpose of the provision was to ensure that advance tax was not a separate final levy. It operated as a payment toward the assessee's ultimate tax liability and was credited when the regular assessment was made.

Section 409 of Income Tax Act 2025 - Current default provision

For the law in force from 1 April 2026, Section 409 of the Income Tax Act, 2025 provides the corresponding rule. A person is deemed to be an assessee in default if the person fails to pay an advance-tax instalment on the date specified in Section 408 where payment is required by an Assessing Officer's order under the specified provisions of Section 407, fails to send the prescribed intimation under Section 407(8), or fails to pay advance tax on the basis of the estimate of current income under Section 407(9), as applicable.

Section 410 of Income Tax Act 2025 - Credit for advance tax

Section 410 provides that a sum, other than penalty or interest, paid by or recovered from an assessee as advance tax under the relevant Part is treated as payment of tax in respect of the income of the tax year in which it was payable. Credit for that amount is given to the assessee in the regular assessment.

1961 Act and 2025 Act terminology: Section 219 referred to the income of the period constituting the previous year for the following assessment year. Section 410 of the 2025 Act uses the simplified concept of the "tax year" and gives credit for advance tax against income of that tax year.

Related advance-tax provisions

The default and credit rules operate as part of the broader advance-tax framework. The amount and timing of advance tax depend on the applicable provisions governing liability, computation, payment and instalments. Interest consequences for shortfall or deferment are governed separately by the relevant interest provisions.

Official references

The applicable enactment and transitional provisions should be checked for the relevant tax period before relying on a section number.