FAQs on Interest under section 234A, 234B & 234C

FAQs on Interest under section 234A, 234B & 234C

Whether interest for short and late payment of advance tax is applicable if it is paid in pursuance of an order issued by the Assessing Officer?

​​​If you fail to pay Advance Tax or pay at less than stipulated rates, you will be required to pay Interest under section 234B & 234C of the Income Tax Act, 1961.

Therefore, even if assesse pays advance tax as per the order under section 210, he shall still be liable to pay interest under section 234B and 234C if advance tax is not paid as per section 211.

How interest under section 234C is calculated?

For a corporate and non-corporate assesse the interest for the late payment/deferment of advance tax instalment is as follows”-

For corporate and non-corporate assessee

Due date of instalment	Amount on which interest is payable	Rate of Interest	Period of interest
On or before June 15	15%*	1% per month	3 months
On or before September 15	45%*	1% per month	3 months
On or before Dec 15	75%*	1% per month	3 months
On or before March 15	100%*	1% per month	1 month

*As reduced by the amount already paid, if any.

For Assessee covered by section​ 44AD

Due date of instalment	Amount on which interest is payable	Rate of Interest	Period of interest
On or before March 15	100%*	1% per month	1 month

*As reduced by the amount already paid, if any.

For Assessee covered by section 44ADA

Due date of instalment	Amount on which interest is payable	Rate of Interest	Period of interest
On or before March 15	100%*	1% per month	1 month

*As reduced by the amount already paid, if any.

What are the consequence on failure to pay advance tax?

If you fail to pay Advance Tax or pay at a rate less than stipulated rates you will be required to pay Interest under sections 234B & 234C of the Income Tax Act, 1961.

Interest under sections 234B – Interest @1% is payable if 90% of the tax is not paid before the end of the Financial year. This is for “Default in payment of Advance tax”.

Interest under section 234C- Interest @1% is payable if the tax is not paid as per the instalments schedule. This is for “Deferment in Instalments of Advance tax”. ​

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