Section 411 — When tax payable and when assessee deemed in default. Successor to s.220 of the 1961 Act.
Section 411 is in Chapter XIX — Collection and Recovery of Tax, which runs from section 390 to section 430.
Sub-section (1) requires any amount, other than advance tax, specified as payable in a notice of demand under section 289 to be paid at the place and to the person mentioned in the notice within thirty days of its service, or within a shorter period specified in the notice with the previous approval of the Joint Commissioner where the Assessing Officer has reason to believe that allowing the full thirty days would be detrimental to revenue.
Sub-section (2) provides that where a notice of demand has been served and an appeal or other proceeding is filed or initiated in respect of the amount, the demand is deemed valid till the disposal of the appeal by the last appellate authority or the disposal of the proceedings, and the notice has the effect specified in section 3 of the Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964.
Sub-section (3), as substituted by Act No. 4 of 2026 with effect from 1 April 2026, charges simple interest at 1% for every month or part of a month where the demand is not paid within the period under sub-section (1), the period running from the day immediately following the end of that period to the day the amount is paid; and clause (b), which the earlier text did not contain, provides that no interest is charged on a demand raised on account of a penalty levied under section 439 up to the date of passing of the order under section 359, or up to the date of the order under section 363 where the assessment or reassessment was made pursuant to directions of the Dispute Resolution Panel under section 275. Sub-section (4) prevents double interest: none is charged under sub-section (3) on an amount for a period for which interest is charged on the same amount for the same period under section 398(3) on tax specified in an intimation under section 399.
Sub-section (5) permits the Assessing Officer, on an application made by the assessee before the expiry of the due date under sub-section (1), to extend time or allow payment by instalments on such conditions as he thinks fit. Sub-section (6) adjusts interest where an order under section 287, 288, 359, 363, 365(10), 368 or 378, or a Settlement Commission order under section 245D(4) of the Income-tax Act, 1961, reduces the amount — interest is reduced and excess interest refunded — and where a later order under those sections or section 377 increases it, interest runs again from the day following the end of the period in the first notice of demand to the day of payment.
Sub-section (7) allows the Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner, on the assessee's application, to reduce or waive interest paid or payable under sub-section (3) if satisfied that payment has caused or would cause genuine hardship, that the default was due to circumstances beyond the assessee's control, and that the assessee has co-operated in any inquiry relating to the assessment or any recovery proceeding. Sub-section (8) requires that order to be passed within twelve months from the end of the month in which the application is received, and sub-section (9) forbids a rejection in full or in part without an opportunity of being heard.
Sub-section (10) deems the assessee to be in default if the amount is not paid within the time under sub-section (1) or as extended under sub-section (5). Sub-section (11) provides that a default in any one instalment allowed under sub-section (5) makes the assessee deemed in default as to the whole amount then outstanding, and deems the other instalments to have been due on the same date as the one in default. Sub-section (12) permits the Assessing Officer, where an appeal has been presented under section 356 or 357, in his discretion and on such conditions as he thinks fit, to treat the assessee as not in default in respect of the amount in dispute until the appeal is disposed of. Sub-section (13) requires the Assessing Officer not to treat the assessee as in default for tax on income arising in a country whose laws prohibit or restrict remittance to India, for so long as the restriction lasts, and sub-section (14) deems that income to have been brought into India if it has been or could have been used for expenditure actually incurred outside India, or has been brought into India in any form, whether capitalised or not.
A demand has to have a payment date and a consequence for missing it, and this section supplies both: thirty days, then interest at 1% a month and the status of an assessee in default, which is what opens the recovery machinery. The rest of the section is the set of safety valves around that hard rule — instalments, a discretionary hold while an appeal is pending, a waiver for genuine hardship, an adjustment when an appellate order changes the amount, and protection where foreign exchange controls make payment impossible.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Time to pay an amount specified in a notice of demand | Thirty days of the service of the notice | Any amount otherwise than by way of advance tax, payable at the place and to the person mentioned in the notice under section 289 | Sub-section (1)(a) |
| Shorter period for payment | A period less than thirty days, as specified in the notice | Only with the previous approval of the Joint Commissioner, where the Assessing Officer has reason to believe that allowing the full thirty days would be detrimental to revenue | Sub-section (1)(b) |
| Rate of interest on an unpaid demand | Simple interest at 1% for every month or part of a month | Running from the day immediately following the end of the period in sub-section (1) to the day the amount is paid | Sub-section (3)(a) |
| Time to decide an application to reduce or waive interest | Twelve months from the end of the month in which the application is received | For an order under sub-section (7), whether accepting or rejecting the application in full or in part | Sub-section (8) |
Filing an appeal does not stop the clock. Sub-section (2) keeps the demand valid until the last appellate authority disposes of the appeal, interest continues under sub-section (3), and the only relief is the Assessing Officer's discretion under sub-section (12) to treat the assessee as not in default for the disputed amount — a discretion that has to be asked for and can be made conditional. The application for instalments or extra time under sub-section (5) must be made before the due date under sub-section (1) expires; once that date passes the assessee is deemed in default under sub-section (10). Instalments carry a harsh consequence — one missed instalment makes the whole outstanding amount immediately in default, and the remaining instalments are deemed to have fallen due on the same date, under sub-section (11). The waiver in sub-section (7) needs all three conditions together, not any one of them, and it reaches only interest, not the tax. The 2026 substitution of sub-section (3) added clause (b), which stops interest running on a penalty demand under section 439 up to the section 359 order, or up to the section 363 order where the assessment followed Dispute Resolution Panel directions under section 275 — a period for which the earlier text gave no relief.
A notice of demand under section 289 for Rs. 20 lakh is served on 5 June, so payment is due by 5 July. The assessee pays on 20 September. Interest under sub-section (3)(a) runs from 6 July at 1% a month or part of a month — three part-months to 20 September — which is Rs. 60000. Filing an appeal would not have avoided that: sub-section (2) keeps the demand valid, and only a discretionary order under sub-section (12) could have treated the assessee as not in default for the disputed amount pending the appeal.
You meet this section as the notice of demand under section 289 that follows an assessment order, and then in the recovery correspondence that follows a missed due date. The active uses are the application under sub-section (5) for instalments before the due date, the request under sub-section (12) while an appeal is pending, and the waiver application under sub-section (7).
the assessee shall be liable to pay simple interest at 1% for every month or part of a month comprised in the period
such demand shall be deemed to be valid till the disposal of the appeal by the last appellate authority or disposal of the proceedings
the assessee shall be deemed to be in default as to the whole of the amount then outstanding
No interest shall be charged under this sub-section in respect of any demand raised on account of penalty levied under section 439,— (i) up to the date of passing of the order under section 359
See the full 1961 to 2025 concordance.
All of them are in the Rules 2026 index.
See the circulars index.