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Interest for Deferment of Advance Tax – Sec 234C

Interest is payable by assessee under section 234C for non payment or under payment of advance tax.

Rate of Interest – Simple Interest @ 1% per month or part of month

Interest is calculated  by Non Corporate Assessee as provided under:-

Interest is Payable
under Sec 234C if
Period of Interest Amount on which
Interest Payable
Advance tax paid on or before
15th September is less than 30% of
tax on returned income
3 months 30% of tax on returned income – a
Advance tax paid on or before
15th December is less than 60% of
tax on returned income
3 months 60% of tax on returned income – b
Advance tax paid on or before
15th March is less than 100% of
tax on returned income
100% of tax on returned income – c

Tax on returned Income means the tax chargeable on the total income declared in the return of income furnished by the assessee as reduced by the amount of,—

 (i)  any tax deductible or collectible at source in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income;

(ii) any relief,deduction or tax credit allowed under section 90, 90A, 91, 115JAA or 115JD.

a) Amount of advance tax paid on or before 15th September of financial year.

b) Amount of advance tax paid on or before 15th December of financial year.

c) Amount of advance tax paid on or before 15th March of financial year.

Interest is calculated  by a Corporate Assessee as provided under:-

Interest is Payable
under Sec 234C if
Period of Interest Amount on which
Interest Payable
Advance tax paid on or before
15th June is less than 12% of
tax on returned income
3 months 15% of tax on returned income – a
Advance tax paid on or before
15th September is less than 36% of
tax on returned income
3 months 45% of tax on returned income – b
Advance tax paid on or before
15th December is less than 75% of
tax on returned income
3 months 75% of tax on returned income – c
Advance tax paid on or before
15th March is less than 100% of
tax on returned income
100% of tax on returned income – d

Tax on returned Income means the tax chargeable on the total income declared in the return of income furnished by the assessee as reduced by the amount of,—

 (i)  any tax deductible or collectible at source in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income;

(ii) any relief,deduction or tax credit allowed under section 90, 90A, 91, 115JAA or 115JD.

a) Amount of advance tax paid on or before 15th June of financial year.

b) Amount of advance tax paid on or before 15th September of financial year.

c) Amount of advance tax paid on or before 15th December of financial year.

d) Amount of advance tax paid on or before 15th March of financial year.

Interest Not Payable

Interest is not payable if the shortfall in the payment of advance tax is on account of under-estimate or failure to estimate

  • the amount of capital gains
  • income of nature referred in sec 2(24)(ix) (i.e lottery income, gambling income etc.)

and the assessee has paid the whole of the amount of tax payable in respect of such income as part of the remaining instalments of advance tax which are due or where no such instalments are due, by the 31st March of the financial year.

Also Read  :  Advance Income Tax

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