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Interest Imposed by the IT Department Section 234C

Interest Imposed by the IT Department Section 234C

This is the last part in a 3-part series about Interest imposed by the I-T Department.

Read our previous guides on Section 234A and Section 234B.

Part III: Section 234 C
(Interest for Deferred Payment of Advance Tax)

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 BeforeIn case of a Corporate TaxpayerIn case of a Non-Corporate Taxpayer
15th JuneUp to 15% of advance tax payable
15th SeptemberUp to 45% of advance tax payableUp to 30% of advance tax payable
15th DecemberUp to 75% of advance tax payableUp to 60% of advance tax payable
15th MarchUp to 100% of advance tax payableUp to 100% of advance tax payable

Interest Imposed by the IT Department Section 234C

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.

Interest Imposed by the IT Department Section 234C

Calculation of Interest under section 234C – In case of a Non-Corporate Tax Payer

Rate of InterestPeriod of InterestAmount 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 month3 months30% 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 month3 months60% 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 month60% of Amount* less tax already deposited before March 15

Interest Imposed by the IT Department Section 234C

*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 InterestPeriod of InterestAmount 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 month3 months15% 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 month3 months45% 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 month3 months75% 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 month100% of Amount* less tax already deposited before March 15

Interest Imposed by the IT Department Section 234C

*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 IT Department Section 234C

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Interest Imposed by the IT Department Section 234C

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