• English

As per Section 208 of the Income Tax Act, of 1961, all taxpayers must pay advance taxes. It is applicable for individuals with minimum projected tax liabilities of ₹10,000, after TDS, from the previous year.

Taxpayers can pay this tax in four installments, the due date for which is the 15th of the last month of the quarter. If you fail to pay on time, you will have to pay advance tax interest as stipulated in the I-T Act.

## Interest and Penalty on Delay in Advance Tax Payments

Here are the details about advance tax interest on late or default payments under sections 234B and 234C:

### 1. Section 234B

The advance tax penalties under this section are applicable in the following scenarios:

• When the taxpayer fails to pay the advance tax against their liability

• When the taxpayer has paid less than 90% of the total assessed advance tax amount

In this case, a simple interest of 1% applies as a penalty per month or for part of the month on default in payment.

### 2. Section 234C

The advance tax interest under this section is applicable if:

• Taxpayers pay less than 12%, 36%, 75%, and 100% of their liability at the end of each quarter

• Taxpayers, under the presumptive tax scheme, pay less than 100% of their liability on or before March 15th

Under these circumstances, the penalty will be a simple interest of 1% per month or part of the month.

## Examples of Advance Tax Interest and Penalty Computations

Here are a few instances to help you understand how to calculate advance tax interest in case of late payment:

### 1. Under Section 234B

Imagine you have an advance tax liability of ₹12,000, which you do not pay before March 15th. In this case, your interest penalty u/s 234B will be 1% per month or for part of the month.

The interest rate will be applicable until you pay the tax liability. So, if you paid the advance tax in July, the total amount that you must pay as a penalty will amount to

SI= P X R X T

= ₹12,000 X 1% X 4 (i.e. April, May, June, and July)

= ₹480

### 2. Under Section 234C

Suppose your total tax liability is ₹45,500, which makes you liable for advance tax payments. Given this, you pay ₹8,000, ₹11,000, ₹12,000, and ₹14,500 every quarter. As per Section 234C, your interest penalty will be:

 Advance Tax Paid Minimum Due Shortfall Amount Interest payable ₹8,000 ₹5,460 (12%) ₹0 ₹0 ₹11,000 ₹16,380 (36%) ₹0 ₹0 ₹12,000 ₹34,125 (75%) ₹3,125 ₹93 (1% for 3 months) ₹14,500 ₹45,500 (100%) ₹0 ₹0

In the above example, the shortfall of ₹3,125 is rounded off to ₹3,100 as per Rule 119A.

If you had failed to pay 12% or 36% in the respective quarter, the penalty amount would be calculated as per the slab limit. This means it will be based on 15% and 45% and not 12% and 36%. Any tax that you pay before 31st March is treated as advance. So, ensure that you pay your liabilities on time and avoid hefty penalties.

To pay the advance tax, all you have to do is fill in Challan 280 and pay through net banking or any other accepted mode. You can also use the income tax calculator available on the Income Tax Department’s website to evaluate your liabilities. Doing so will help ensure that you do not fall short in any quarter and can avoid the advance tax penalties.

## FAQs on Advance Tax Interest and Penalties

### What is the advance tax payable in each installment at the end of every quarter?

You will have to pay 15%, 45%, 75%, and 100% of your advance tax at the end of every quarter.

### How can I make an advance tax payment?

You can make advance tax payments on the Income Tax Department website by filling out the Challan 280.

### Can I pay an advance tax after the due date?

Yes, any tax you pay before 31st March is treated as advance tax. However, advance tax interest will apply to your total tax liability under Sections 243B and 243C if there is a delay in payment.

### What are the exceptions to paying advance tax interest under Section 234C?

Resident senior citizens with no income under the 'PGBP' heading do not need to pay any advance tax or interest u/s 234C. Additionally, late payment will attract no advance tax penalties under this section if your net liability does not exceed ₹10,000.

### Other Investment Products

Earn interest up to 8.60% p.a. by investing in a Bajaj Finance Fixed Deposit | Rated CRISIL AAA/ STABLE and [ICRA]AAA(stable)
Home
Loan Offer
CIBIL Score