Interest for defaults in payment of advance tax – Section 234B

An assessee who is liable to pay advance tax but failed to pay such tax or tax paid by him is less than 90% of the assessed advance tax, is liable to pay interest under this section.

Rate of Interest – Simple interest @ 1% per month or part of the month is payable on amount of shortfall in payment of advance tax.

Period of Interest – Interest is chargeable from 1st day of the assessment year to the date of regular assessment (date on which self assessment tax is paid) or where income is determined under section 143(1) then to such date.

Amount on which interest is payable – Tax on total income less advance tax paid, TDS or TCS deducted, relief under section 90/90A/91 and MAT credit under section 115JAA.

Case Laws-

Interest under section 234B is automatic even if assessment order does not contain any direction for payment. CIT vs M/s Bhgat Construction Co. Pvt. Ltd. (SC 2015)

Also Read: Advance Tax Calculation and Payment

Prateek Agarwal

Prateek Agarwal

I am Practicing Chartered Accountant from Jaipur and in practice for more than 9 years. I writes mainly for GST and Finance.

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