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 levied under section 234C. Apart from that, there are two more types of interests under section 234
- Delay in filing of Tax Returns – Section 234A
- Delay of payment of Advance Tax – Section 234B
- Deferred payment of Advance Tax – Section 234C
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 u/s 234C is calculated for the delay/non-payment of advance tax during the year.
As mentioned above, the assessee has to calculate advance tax and should pay his Tax Liability for a particular Financial Year if the amount calculated is estimated to be INR 10,000 or more. As per the Income Tax Act, the assessee is required to pay advance tax in installments as mentioned in the advance tax due dates table below:
| Due date of installment | Advance Tax payable by Individual and Corporate Taxpayers |
| On or before 15th June | 15% of the advance tax liability |
| On or before 15th September | 45% of the advance tax liability |
| On or before 15th December | 75% of the advance tax liability |
| On or before 15th March | 100% of the advance tax liability |
So in case of short/no payment of advance tax, interest/penalty will be levied u/s 234C and it is calculated as follows:
| Scenario | Interest |
|---|---|
| If paid Less than 45% of advance tax up to 15th September | 1% per month i.e. 3 months on the shortfall amount below 45% |
| Less than 75% up to 15th December | 1% per month i.e. 3 months on the shortfall amount below 75% |
| Not 100% Up to 15th March | 1% on the shortfall amount below 100% for 1 month |
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For Example
Pratik is running a small shop. His tax liability is INR 45,000. He has paid advance tax as given below:
- INR 21,000 on 15th September
- INR 5,000 on 15th December
- and, INR 15,000 on 15th March
Penalty for Delay in Advance Tax Under Section 234C of Income Tax Act
| Installment | Advance tax due to be paid | Advance tax actually paid till date | Shortfall | Interest |
| 15th September | 20,250 (45% of 45,000) | 21,000 | 0 | 0 |
| 15th December | 33,750 (75% of 45,000) | 26,000 (21,000 + 5000) | 7750 | 233 (7750 x 3 months x 1%) |
| 15th March | 41,500 (100% of 45000) | 41,000 (21,000 + 5,000 + 15,000) | 4000 | 40 (4000 x 1 month x 1%) |
| Total Int u/s 234c | 273 |
FAQs
– Interest u/s 234Aof Income Tax Act is levied on taxpayers if they delay in filing their Income Tax Return (ITR).
– The Interests 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.
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.
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.
There are two ways of tax payment:
– Deposit in the bank with advance tax challan or
– Online payment using Net banking facility.
