Section 234C: Penalty for Advance Tax delay in payment

author portrait

Hiral Vakil

Advance Tax
Income Tax Filing
ITR Penalty
Section 234C

The due date for filing the ITR is always defined and if you miss the deadline to file your ITR, you might face the consequences like having to pay interest based on Section 234. The Penalty for Advance Tax delay in payment is leived u/s 234C. Apart from that, there are two more types of interests under section 234

So, let’s discuss Section 234C in this article. Taxpayers can pay the advance tax in 4 installments during the Financial Year. However, if you still default, there are consequences in the form of an interest penalty u/s 234C. This interest is calculated for the delay/non-payment of advance tax during the year.

Advance Tax : Eligibility, Due Dates, Calculation, Penalties & Payment

As mentioned above, the assessee is supposed to pay Advance Tax if his Tax Liability for a particular Financial Year is estimated to be Rs. 10,000 or more. As per the Income Tax Act, the assessee is required to pay advance tax in installments as mentioned below:

Due date of installmentAdvance Tax payable by Individual and Corporate Taxpayers
On or before 15th June15% of the advance tax liability
On or before 15th September45% of the advance tax liability
On or before 15th December75% of the advance tax liability
On or before 15th March100% of the advance tax liability


Advance Tax Filing (Quarterly)
CA Assisted Advance Tax calculation and payment for Individuals and businesses with tax payable more than INR 10,000 after TDS deducted
[Rated 4.8 stars by customers like you]
Advance Tax Filing (Quarterly)
CA Assisted Advance Tax calculation and payment for Individuals and businesses with tax payable more than INR 10,000 after TDS deducted
[Rated 4.8 stars by customers like you]

So in case of short/no payment of advance tax, interest/penalty will be levied u/s 234C and it is calculated as follows:

ScenarioInterest
If paid Less than 45% of advance tax up to 15th September1% per month i.e. 3 months on the shortfall amount below 45%
Less than 75% up to 15th December1% per month i.e. 3 months on the shortfall amount below 75%
Not 100% Up to 15th March1% on the shortfall amount below 100% for 1 month

For Example:

Pratik is running a small shop. His tax liability is Rs. 45,000. He has paid advance tax as given below:

Penalty for delay in Advance Tax u/s 234C

InstallmentAdvance tax due
to be paid
Advance tax actually
paid till date 
ShortfallInterest
15th September
20,250
(45% of 45,000)
21,00000
15th December33,750
(75% of 45,000)
26,000
(21,000 + 5000)
7750233
(7750 x 3 months x 1%)
15th March41,500
(100% of 45000)
41,000
(21,000 + 5,000 + 15,000)
400040
(4000 x 1 month x 1%)
Total Int u/s 234c273
Advance Tax Filing (Annual)
CA Assisted Advance Tax calculation and payment for Individuals and businesses with tax payable more than INR 10,000 after TDS deducted
[Rated 4.8 stars by customers like you]
Advance Tax Filing (Annual)
CA Assisted Advance Tax calculation and payment for Individuals and businesses with tax payable more than INR 10,000 after TDS deducted
[Rated 4.8 stars by customers like you]

FAQs

What is the difference between 234A, 234B and 234C?

Interest u/s 234Aof Income Tax Act is levied on taxpayers if they delay in filing their Income Tax Return (ITR).
Interest u/s 234B of Income Tax Act is levied upon those taxpayers who default in payment of Advance Tax.
– Interest u/s 234C of Income Tax Act is levied upon those taxpayers who default in paying installments of advance tax.

Do salaried people have to pay advance tax?

​No. Since TDS is deducted from salary income by the employer no need to pay advance tax. However, for all the incomes other than salary, if the total of such incomes exceed Rs. 2,50,000 then they will have to assess the tax liability on the same and pay Advance Tax.

How do I determine whether I am liable to pay advance tax or not?

​Before every due date for payment of Advance Tax, you will have to calculate your expected annual income and determine the tax liability on the same. If your total tax liability exceeds Rs. 10,000 then you are liable to pay advance tax as per the schedule has given above.

How to pay advance tax?

​There are two ways of tax payment:
– Deposit in the bank with advance tax challan or
– Online payment using Net banking facility.

Close Bitnami banner
Bitnami