Interest Imposed by the I-T Department – Section 234C
The Income Tax department expects you to pay your taxes on time, otherwise you are charged interest for late payment, at the time of filing your returns.
Advance tax is paid on the following dates of a financial year:
| On or Before | In case of a Corporate Taxpayer | In case of a Non-Corporate Taxpayer |
| 15th June | Up to 15% of advance tax payable | |
| 15th September | Up to 45% of advance tax payable | Up to 30% of advance tax payable |
| 15th December | Up to 75% of advance tax payable | Up to 60% of advance tax payable |
| 15th March | Up to 100% of advance tax payable | Up to 100% of advance tax payable |
Interest
The interest for late payment is set at 1% simple interest on the amount of tax due, calculated from the individual cut off dates shown above, till the date of actual payment of outstanding taxes.
Calculation of Interest under section 234C – In case of a Non-Corporate Tax Payer
| Rate of Interest | Period of Interest | Amount on which Interest is calculated | |
| If Advance Tax paid on or before September 15 is less than 30% of the Amount* | Simple interest @1% per month | 3 months | 30% of Amount* less tax already deposited before September 15 |
| If Advance Tax paid on or before December 15 is less than 60% of the Amount* | Simple interest @1% per month | 3 months | 60% of Amount* less tax already deposited before December 15 |
| If Advance Tax paid on or before March 15 is less than 100% of the Amount* | Simple interest @1% per month | – | 60% of Amount* less tax already deposited before March 15 |
*Amount = Tax on total income less TDS less relief u/s 90 or 91 less tax credit u/s 115JD
Calculation of Interest under section 234C – In case of a Corporate Tax Payer
| Rate of Interest | Period of Interest | Amount on which Interest is calculated | |
| If Advance Tax paid on or before June 15 is less than 12% of the Amount* | Simple interest @1% per month | 3 months | 15% of Amount* less tax already deposited before June 15 |
| If Advance Tax paid on or before September 15 is less than 36% of the Amount* | Simple interest @1% per month | 3 months | 45% of Amount* less tax already deposited before September 15 |
| If Advance Tax paid on or before December 15 is less than 75% of the Amount* | Simple interest @1% per month | 3 months | 75% of Amount* less tax already deposited before December 15 |
| If Advance Tax paid on or before March 15 is less than 100% of the Amount* | Simple interest @1% per month | – | 100% of Amount* less tax already deposited before March 15 |
*Amount = Tax on total income less TDS less relief u/s 90 or 91 less tax credit u/s 115JD
Note that no interest is payable if there is any shortfall in payment of advance tax due-
·
- If it is on account of underestimation or failure to estimate amount of capital gains or speculative income (lottery income, gambling income etc) AND
·
- The taxpayer has paid in full – tax payable on the income mentioned above, while paying remaining installments of advance tax due, or if no installment is due, tax payer pays them before the end of the financial year
Interest Imposed by the I-T Department – Section 234C
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