Income Tax Law | Historical Provision

Section 217 of the Income Tax Act, 1961: Interest When No Advance Tax Estimate Was Made

Section 217 dealt with interest payable by an assessee who failed to submit an advance-tax statement or estimate under the former advance-tax regime. It is important to distinguish this historical provision from the rules applicable to later tax years.

Applicability: Section 217 does not apply to assessments for assessment year 1989-90 or subsequent assessment years, by virtue of section 217(3). Its historical 15% annual interest rate must not be treated as the current rate.

What did Section 217 provide?

Under the earlier Income-tax Act, 1961 advance-tax framework, specified taxpayers had to furnish statements or estimates of advance tax under sections 209A and 212. Section 217 imposed interest where the prescribed statement or estimate was not furnished and the statutory conditions were met at regular assessment.

The term assessee generally refers to a person by whom tax or another sum is payable under the Act. An advance-tax estimate was the taxpayer's estimate of advance tax due, submitted under the provisions then applicable. Assessed tax was determined by reference to section 215(5) for purposes of this historical provision.

Historical subsections of Section 217

Section 217(1): Failure to furnish a statement or estimate

Where a person covered by section 209A(1)(a) failed to submit the required statement or substitute estimate, or a person covered by section 209A(1)(b) failed to submit the required estimate, interest could arise on the assessed tax. The historical text specified simple interest at 15% per annum from 1 April following the relevant financial year until regular assessment.

Section 217(1A): Failure to submit an additional estimate

This provision addressed failures to submit estimates required under section 209A(4) or section 212(3A). Interest was computed on the shortfall between advance tax paid and assessed tax, for the historical period specified in the section.

Section 217(2): Application of Section 215

Subsections 215(2), 215(3) and 215(4), concerning the effect of tax payments, consequential changes and possible reduction or waiver, applied correspondingly to interest under section 217.

Section 217(3): Discontinuance for later assessment years

Section 217 ceased to apply from assessment year 1989-90 onwards. Therefore, an assessment or interest demand relating to a later assessment year must be considered under the provisions applicable to that year, rather than automatically under section 217.

Advance-tax interest under later legislation

For assessment years governed by the later framework of the Income-tax Act, 1961, section 234B generally concerns interest for default in payment of advance tax, while section 234C generally concerns interest for deferment of advance-tax instalments. The conditions, thresholds, rates and computation periods differ from historical section 217.

The Income-tax Act, 2025 commenced on 1 April 2026. For tax years governed by that Act, the applicable provisions of the 2025 legislation and its transition and savings rules must be consulted. The 1961 Act remains relevant to earlier assessment years where preserved by law.

Historical calculation illustration

Suppose, purely for illustration, historical interest was chargeable on assessed tax of Rs. 40,000 for six months at 15% per annum. Simple interest would be Rs. 40,000 x 15% x 6/12 = Rs. 3,000. Actual liability would depend on the precise historical statutory conditions, assessment dates, payments and applicable amendments.

Official legal references

Use the text applicable to the relevant assessment year, including amendments and savings provisions. The links above are official reference portals.

Original statutory material and amendment notes

Show archived historical text from the original webpage

<h1>217 Income Tax Act - Interest payable by assessee when no estimate made</h1> <h2>Section 217 of Income Tax Act 1961 - Interest payable by assessee when no estimate made</h2> 3 (1) Where, on making the regular assessment, 4 the 1 Assessing Officer finds- (a) that any such person as is referred to in clause (a) of sub-section (1) of section 209A has not sent the statement referred to in that clause or the estimate in lieu of such statement referred to in sub-section (2) of that section; or (b) that any such person as is referred to in clause (b) of sub-section (1) of section 209A has not sent the estimate referred to in that clause, simple interest at the rate of 2 fifteen per cent. per annum from the 1st day of April next following the financial year in which the advance tax was payable in accordance with 5 the said sub-section (1) or sub-section (2) up to the date of the regular assessment shall be payable by the assessee upon the amount equal to the assessed tax as defined in sub-section (5) of section 215. (1A) Where, on making the regular assessment, the 1 Assessing Officer finds that 6 any person who is required to send an estimate under sub-section (4) of section 209A or any such person as is referred to in sub-section (3A) of section 212 has not sent the estimate referred to therein, simple interest at the rate of 1 fifteen per cent. per annum from the 1st day of April next following the financial year in which the advance tax was payable in accordance with 7 the said sub-section (4) or, as the case may be, sub-section (3A) up to the date of the regular assessment shall be payable by the assessee upon the amount by which the advance tax paid by him falls short of the assessed tax as defined in sub-section (5) of section 215. (2) The provisions of sub-sections (2), (3) and (4) of section 215 shall apply to interest payable under this section as they apply to interest payable under that section. ----------------------1. Subs. by Act 4 of 1988, s. 2, for "Income-tax officer" (w.e.f. 1-4-1988)2. Subs. by Act 67 of 1984, s. 24, for "twelve per cent." (w.e.f. 1-10-1984). Earlier the quoted words were substituted by Act 16 of 1972, s. 25 for "nine per cent." (w.e.f. 1-4-1972).3. Subs. by Act 14 of 1969, s. 20, for sub-section (1) (w.e.f. 1-4-1970).4. Subs. by Act 19 of 1978, s. 29, for "the Income-tax Officer finds that any such person as is referred to in sub-section (3) of section 212 has not sent the estimate referred to therein, simple interest at the rate of twelve per cent. per annum" (w.e.f. 1-6-1978).5. Subs. by s. 29, ibid., for "the said sub-section" (w.e.f. 1-6-1978).6. Ins. by s. 29, ibid. (w.e.f. 1-6-1978).7. Subs. by s. 29, ibid., for "the said sub-section" (w.e.f. 1-6-1978).

Updated 27 October 2026. General legal information, not a substitute for advice on a specific assessment.