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 Income-tax Act, 1961, s.219, as printed on the departmental section pages stamped Year: 2025 and Year: 2024 (No. 1). 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 on the Year: 2025 and Year: 2024 (No. 1) departmental pages: '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 Income-tax Act, 1961, s.219, as printed on the departmental section pages stamped Year: 2025 and Year: 2024 (No. 1). 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 on the Year: 2025 and Year: 2024 (No. 1) departmental pages: '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 Income-tax Act, 1961, s.219, as printed on the departmental section pages stamped Year: 2025 and Year: 2024 (No. 1). 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 on departmental pages of two vintages (Year: 2025 and Year: 2024 (No. 1)), which is the strongest evidence available this pass that no later amendment has displaced it. No footnote apparatus rendered, so no amendment history was read, and validity was not checked against any judicial decision. 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 https://incometaxindia.gov.in/w/section-219-64 (heading 'Credit for advance tax', Act 'Income-tax Act, 1961', Year: 2025) and independently, word for word, from /w/section-219-62 (Year: 2024 (No. 1)). No footnote apparatus rendered on either page, 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 /w/section-211-64 and /w/section-211-62. The observation that s.219 supports the line of authority on interest on refunds is offered as analysis of the statutory words; no judgment was read on that point this pass, 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 departmental text relied on (Year: 2025), no footnote apparatus rendered, and no amending Act was retrieved for this section. 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.
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