The assessment order taxes the year but the computation sheet has not given credit for the advance tax my client paid, or has credited it to the wrong year. What is the statutory basis for insisting on the credit?
Section 219 is the answer and it is a single sentence: any sum, other than a penalty or interest, paid by or recovered from an assessee as advance tax in pursuance of Chapter XVII shall be treated as a payment of tax in respect of the income of the period which would be the previous year for an assessment for the assessment year next following the financial year in which it was payable, and credit therefor shall be given to the assessee in the regular assessment. So the section does two things: it characterises advance tax as a payment of tax rather than a deposit, and it fixes the year to which that payment belongs by reference to the financial year in which the tax was payable.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2025-04-01, reported as Section 219 of the Income-tax Act, 1961, as amended up to 2025. It bears on section 219, section 211, section 207, section 208, section 154, section 156 of the Income Tax Act 1961, in Assessment & Scrutiny, Demand, Recovery & Stay and Refunds, Interest & Condonation matters.
Three consequences follow, and each is worth taking in the right case. First, the year of credit is not a matter of the assessee's or the officer's choice: it is the assessment year next following the financial year in which the advance tax was payable, which is what defeats an attempt to shift a payment to a later year or to treat it as an unadjusted deposit. Read with the proviso to s.211(1) — any amount paid by way of advance tax on or before 31 March is treated as advance tax paid during the financial year ending on that day for all the purposes of the Act — a payment made in the second half of March still belongs to that financial year and takes credit in the following assessment year. Second, the words 'shall be treated as a payment of tax' are what make advance tax discharge the liability rather than sit as a credit balance; that characterisation is the foundation of the line of authority on interest on refunds, because a sum treated as a payment of tax and later found to be excess is a refund of tax. Third, the section expressly excludes any sum paid as penalty or interest, so a payment appropriated against interest is not advance tax and does not attract this credit rule — which is why appropriation of a part-payment matters and should be recorded on the challan.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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Section 219 of the Income-tax Act, 1961 is headed 'Credit for advance tax' and consists of a single sentence, printed identically in the two most recent published editions: 'Any sum, other than a penalty or interest, paid by or recovered from an assessee as advance tax in pursuance of this Chapter shall be treated as a payment of tax in respect of the income of the period which would be the previous year for an assessment for the assessment year next following the financial year in which it was payable, and credit therefor shall be given to the assessee in the regular assessment.' It is the last section of Part C of Chapter XVII, which begins with s.207 and includes the computation, payment, instalment and interest provisions in ss.208 to 218.
A sum paid by or recovered from an assessee as advance tax under Chapter XVII, other than a sum paid as penalty or interest, is to be treated as a payment of tax in respect of the income of the previous year corresponding to the assessment year next following the financial year in which the advance tax was payable, and credit for it must be given in the regular assessment. The year of credit is fixed by the statute, and the character of the sum is that of a payment of tax and not of a deposit.
Not applicable — this is a statement of the statutory text as printed on the departmental section pages. No judicial reasoning is involved.
Any sum, other than a penalty or interest, paid by or recovered from an assessee as advance tax in pursuance of this Chapter shall be treated as a payment of tax in respect of the income of the period which would be the previous year for an assessment for the assessment year next following the financial year in which it was payable, and credit therefor shall be given to the assessee in the regular assessment.
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Handle my notice → Ask a CA on WhatsAppSection 219 is the answer and it is a single sentence: any sum, other than a penalty or interest, paid by or recovered from an assessee as advance tax in pursuance of Chapter XVII shall be treated as a payment of tax in respect of the income of the period which would be the previous year for an assessment for the assessment year next following the financial year in which it was payable, and credit therefor shall be given to the assessee in the regular assessment. So the section does two things: it characterises advance tax as a payment of tax rather than a deposit, and it fixes the year to which that payment belongs by reference to the financial year in which the tax was payable. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 219, section 211, section 207, section 208, section 154, section 156 of the Income Tax Act 1961. It is reported as Section 219 of the Income-tax Act, 1961, as amended up to 2025. Three consequences follow, and each is worth taking in the right case. First, the year of credit is not a matter of the assessee's or the officer's choice: it is the assessment year next following the financial year in which the advance tax was payable, which is what defeats an attempt to shift a payment to a later year or to treat it as an unadjusted deposit. Read with the proviso to s.211(1) — any amount paid by way of advance tax on or before 31 March is treated as advance tax paid during the financial year ending on that day for all the purposes of the Act — a payment made in the second half of March still belongs to that financial year and takes credit in the following assessment year. Second, the words 'shall be treated as a payment of tax' are what make advance tax discharge the liability rather than sit as a credit balance; that characterisation is the foundation of the line of authority on interest on refunds, because a sum treated as a payment of tax and later found to be excess is a refund of tax. Third, the section expressly excludes any sum paid as penalty or interest, so a payment appropriated against interest is not advance tax and does not attract this credit rule — which is why appropriation of a part-payment matters and should be recorded on the challan. If it applies to you, the first step is this: Where credit has been missed, do not argue the merits: put s.219 in terms — the sum was paid as advance tax in pursuance of Chapter XVII, so it must be treated as a payment of tax for the relevant year and credit must be given in the regular assessment.
Section 219 of the Income-tax Act, 1961 is headed 'Credit for advance tax' and consists of a single sentence, printed identically in the two most recent published editions: 'Any sum, other than a penalty or interest, paid by or recovered from an assessee as advance tax in pursuance of this Chapter shall be treated as a payment of tax in respect of the income of the period which would be the previous year for an assessment for the assessment year next following the financial year in which it was payable, and credit therefor shall be given to the assessee in the regular assessment.' It is the last section of Part C of Chapter XVII, which begins with s.207 and includes the computation, payment, instalment and interest provisions in ss.208 to 218. The matter was decided on 2025-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. A sum paid by or recovered from an assessee as advance tax under Chapter XVII, other than a sum paid as penalty or interest, is to be treated as a payment of tax in respect of the income of the previous year corresponding to the assessment year next following the financial year in which the advance tax was payable, and credit for it must be given in the regular assessment. The year of credit is fixed by the statute, and the character of the sum is that of a payment of tax and not of a deposit.
Not applicable — this is a statement of the statutory text as printed on the departmental section pages. No judicial reasoning is involved. In the words reproduced by the source cited on this page: "Any sum, other than a penalty or interest, paid by or recovered from an assessee as advance tax in pursuance of this Chapter shall be treated as a payment of tax in respect of the income of the period which would be the previous year for an assessment for the assessment year next following the financial year in which it was payable, and credit therefor shall be given to the assessee in the regular assessment."
It was decided by the CBDT Circulars & Instructions on 2025-04-01 and is reported as Section 219 of the Income-tax Act, 1961, as amended up to 2025. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 219, section 211, section 207, section 208, section 154, section 156, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. A sum paid by or recovered from an assessee as advance tax under Chapter XVII, other than a sum paid as penalty or interest, is to be treated as a payment of tax in respect of the income of the previous year corresponding to the assessment year next following the financial year in which the advance tax was payable, and credit for it must be given in the regular assessment. The year of credit is fixed by the statute, and the character of the sum is that of a payment of tax and not of a deposit. It arises in Assessment & Scrutiny, Demand, Recovery & Stay and Refunds, Interest & Condonation matters, on section 219, section 211, section 207, section 208, section 154, section 156 of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Where the challan has gone to the wrong assessment year, use s.219 to fix the correct year: the payment belongs to the assessment year next following the financial year in which the advance tax was payable, not the year the officer prefers. For a payment made between 16 and 31 March, pair s.219 with the proviso to s.211(1) so the payment is treated as advance tax of that financial year for all purposes of the Act and takes credit in the following assessment year. Check what the payment was appropriated against. Section 219 excludes penalty and interest, so a challan appropriated to interest is outside it; where a part-payment is made against a composite demand, record the appropriation in writing at the time. Take a failure to give the credit by rectification under s.154 — it is an error apparent from the record, the challan being on the record — rather than by way of appeal on the merits.
Still good law. The section is printed identically in two published editions, which is the strongest evidence available here that no later amendment has displaced it. No footnote apparatus appeared in either, so no amendment history has been read, and the section has not been checked against any judicial decision. Three qualifications go with that. Identity between two editions is not a reading of the amending Acts, and a practitioner relying on the words for a current year should take them from the Act as it stands. Because no footnote apparatus was available, this entry cannot say when the section reached its present form, and the date recorded against it is the vintage of the text used and not a commencement. And because no judicial treatment has been examined, the analysis offered here rests on the words alone. That matters most for the suggestion that the section supports the line of authority on interest on refunds: the argument is that a sum treated by statute as a payment of tax cannot be treated as something else when it comes back, but whether any court has accepted it in those terms has not been checked, and the library's own entries on s.214 and s.244A should be read before the point is taken. What is safe on the section's own words is narrower and still useful: advance tax paid under Part C of Chapter XVII is tax, and credit for it must be given in the regular assessment. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Section 219 was transcribed in full from the current published text, headed 'Credit for advance tax' in the Income-tax Act, 1961, and independently, word for word, from the edition before it. No footnote apparatus appeared in either, so no amendment to the section could be dated, and this entry states no date for its present form. The proviso to s.211(1) referred to in the analysis was transcribed from the corresponding editions of that section. The observation that s.219 supports the line of authority on interest on refunds is offered as analysis of the statutory words. No judgment has been read on that point for this entry, and the library's existing entries on s.214 and s.244A should be consulted for it. The 'decided_on' date of 1 April 2025 is not an established commencement date for s.219. It records the vintage of the text relied on; no footnote apparatus appeared, and no amending Act was obtained for this section. Two things the section does and two it does not. It does two things in one sentence: it characterises the advance tax as a payment of tax for the year in question, which is what makes it tax and not a deposit, and it obliges the officer to give credit for it in the regular assessment. The second half is the one a practitioner uses, because a demand raised without credit for advance tax actually paid is not merely arithmetically wrong; it is contrary to the section, and that is the ground on which it should be corrected under s.154 rather than argued on the merits. What it does not do is fix the amount or the timing of the credit against any particular instalment: that is the work of s.208 and s.211, and a dispute about which instalment a payment answers is not resolved here. Nor does it deal with a payment made after the financial year has closed, which is self-assessment tax and not advance tax however the challan is marked, or with recovery under a notice of demand issued under s.156 where the assessment has been made without the credit. An assessee in that position should ask for the credit first and contest the demand only so far as it survives the credit being given, because the two arguments are of different kinds and mixing them tends to delay the simpler one. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
A sum paid by or recovered from an assessee as advance tax under Chapter XVII, other than a sum paid as penalty or interest, is to be treated as a payment of tax in respect of the income of the previous year corresponding to the assessment year next following the financial year in which the advance tax was payable, and credit for it must be given in the regular assessment. The year of credit is fixed by the statute, and the character of the sum is that of a payment of tax and not of a deposit.
TaxSphere, “Statutory position — s.219: advance tax is a payment of tax for the year, and credit for it must be given in the regular assessment”, https://taxnotice.vittsphere.com/caselaw/case/statutory-position-219-advance-tax-is-a-payment-of-tax-and-credit-must-be-given-in-the-regular-assessment/ (validity last checked 2026-09-08)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
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My client is 71, resident, retired, and lives on pension, interest and capital gains. The CPC intimation charges her interest under s.234B and s.234C. Is she liable to advance tax at all?
The notice charges me interest under s.234B for not paying advance tax. Before I argue about the computation, was I even liable to pay advance tax in the first place?
