Section 410 Income Tax Act 2025: How Is Advance Tax Credit Given?

Section 410 provides that advance tax paid by, or recovered from, an assessee is credited against the tax payable on income of the relevant tax year in the regular assessment. Interest and penalties are expressly excluded from this credit.

Current statutory position: Section 410, titled "Credit for advance tax", forms part of Chapter XIX, Part C (Advance Tax), of the Income-tax Act, 2025, effective from 1 April 2026. This article refers to the official Act as amended by the Finance Act, 2026.

What does Section 410 provide?

Section 410 states:

Any sum, other than a penalty or interest, paid by or recovered from an assessee as advance tax in pursuance of this Part shall be treated as a payment of tax in respect of the income of the tax year in which it was payable, and credit therefor shall be given to such assessee in the regular assessment.

The provision addresses credit for tax already paid. It does not independently determine how much advance tax is due, the instalment dates or the amount of interest payable for default.

How is credit for advance tax allowed?

1. Amount paid or recovered as advance tax

Credit covers advance tax voluntarily paid by an assessee and advance tax recovered from the assessee under the applicable provisions. The payment must be in pursuance of the advance-tax provisions of this Part.

2. Credit belongs to the relevant tax year

The amount is treated as tax paid on income of the tax year in which the advance tax was payable. The relevant tax year should be identified correctly when reconciling challans and the income-tax return.

3. Credit is given in the regular assessment

The advance-tax amount reduces the balance of tax payable when tax liability is determined through regular assessment. Whether an additional payment or refund arises depends on the full computation, including other permissible tax credits and applicable interest.

4. Interest and penalties are excluded

Amounts paid as interest or penalty are not treated as advance-tax credit under Section 410. A challan that includes more than one component should be checked to distinguish the tax amount from interest or penalty.

Practical point: Section 410 is a credit provision, not an automatic waiver of interest or penalty. An incorrect or missing credit in tax records should be reconciled with payment details and addressed through the applicable return, assessment or rectification process.

Relevant statutory expressions

Advance tax: Income-tax payable during the financial year on current income under Chapter XIX, Part C. Section 403 establishes the general liability, Section 404 sets the threshold, Section 405 provides the computation and Section 408 specifies instalments.

Current income: Under Section 403(2), the total income of the assessee chargeable to tax for the tax year.

Tax year: The period defined by the Income-tax Act, 2025 to which the relevant taxable income relates. Section 410 ties the credit to the tax year for which the advance tax was payable.

Assessee: The person to whom the relevant tax obligation and corresponding credit relate, subject to the Act's definition and applicable provisions.

Regular assessment: The assessment in which the income-tax liability is determined and credit is given for eligible advance tax. This should not be confused with a separate payment of interest or penalty.

Practical examples of advance-tax credit

Example 1: Advance tax paid in instalments

A taxpayer pays Rs. 25,000, Rs. 35,000 and Rs. 40,000 as advance tax for the same tax year. The total advance tax is Rs. 1,00,000. Subject to correct attribution and verification, Section 410 provides credit for Rs. 1,00,000 against the tax liability in regular assessment.

Example 2: Payment includes interest

A taxpayer pays Rs. 60,000 towards advance tax and Rs. 2,000 towards interest. Section 410 covers the Rs. 60,000 tax component, not the Rs. 2,000 interest component. The separate treatment of interest is governed by the applicable provisions.

Example 3: Advance tax recovered

If Rs. 75,000 is lawfully recovered from an assessee as advance tax under this Part, it is treated as advance tax paid for the relevant tax year and qualifies for credit under Section 410. The supporting recovery and accounting records should be preserved.

Section 410 of the 2025 Act and Section 219 of the 1961 Act

Section 410 broadly carries forward the credit principle previously contained in Section 219 of the Income-tax Act, 1961. The parliamentary select committee's examination of the 2025 Bill describes the change as a textual simplification without a policy change. The applicable enactment must nevertheless be selected according to the tax year and transition provisions.

Frequently asked questions

Can advance tax paid be deducted from final income-tax liability?

Yes. Section 410 requires eligible advance tax paid or recovered to be credited in the regular assessment for the relevant tax year.

Does Section 410 allow credit for interest or penalty?

No. The section expressly excludes penalty and interest from the amount treated as advance tax.

Is advance tax recovered by the Department also eligible?

Yes, where the sum is recovered as advance tax in pursuance of the relevant Part of the Act.

Does Section 410 set advance-tax due dates?

No. The instalment schedule appears in Section 408.

What if the credit is not reflected in the assessment?

Check the challan, PAN, tax year, tax-payment records and return details. Where appropriate, seek correction through the available statutory rectification or grievance mechanism. The proper remedy depends on the nature of the mismatch.

Official statutory sources and useful resources

Official Section 410 Income-tax Act 2025 (amended)Income Tax Department payment FAQs

Last reviewed: 12 November 2026. This article provides general legal information and should be read with the applicable Act, rules and notifications.