FAQs on Interest u/s 234A, 234B & 234C

FAQs on Interest under section 234A, 234B & 234C

234a 234b 234c interest-min

Q.1) What are the consequence on failure to pay advance tax?

​​ ​If you fail to pay Advance Tax or pay at a rate less than stipulated rates you will be required to pay Interest under sections 234B & 234C of the Income Tax Act, 1961.

Interest under sections 234B – Interest @1% is payable if 90% of the tax is not paid before the end of the Financial year. This is for “Default in payment of Advance tax”.

Interest under section 234C- Interest @1% is payable if the tax is not paid as per the instalments schedule. This is for “Deferment in Installments of Advance tax”.

Q.2) How interest under section 234C is calculated?

​​For a corporate and non-corporate assesse the interest for the late payment/deferment of advance tax instalment is as follows”-

  1. For Non Corporate Assessee (upto Assessment Year 2016-17)
Due date of instalmentAmount on which interest is payableRate of InterestPeriod of Interest
On or before September 1530%1%3 months
On or before Dec 1560%1%3 months
On or before March 15100%1%1 months

For corporate and non-corporate assessee ( from Assessment year 2017-18)

Due date of installmentAmount on which interest is payableRate of InterestPeriod of interest
On or before June 1515%1% per month3 months
On or before September 1545%1% per month3 months
On or before Dec 1575%1% per month3 months
 

On or before March 15

100%1% per month1 month

For Assessee covered by section​ 44AD (from the assessment year 2017-18)

Due date of instalmentAmount on which interest is payableRate of InterestPeriod of interest
On or before March 15100%1% per month1 month​

For Assessee covered by section 44ADA

On or before March 15100%1% per month1 month​

​ Click here to calculate Advance Tax Liability

Q.3) Whether interest for short and late payment of advance tax is applicable if it is paid in pursuance of an order issued by the Assessing Officer?

  • ​​If you fail to pay Advance Tax or pay at less than stipulated rates, you will be required to pay Interest & Penalty under section 234B & 234C of the Income Tax Act, 1961.
  • Therefore, even if assesse pays advance tax as per the order under section 210, he shall still be liable to pay interest under section 234B and 234C if advance tax is not paid as per section 234B and 234C.

 

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