Section 234C of Income Tax Act : Interest for Delay in Payment for Advance Tax

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

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


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:

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

File Your Tax Return

On Time , Online on Quicko.com

Open Your Account Today

File Your Tax Return

On Time , Online on Quicko.com

Open Your Account Today

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
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).
– 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.

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.

Got Questions? Ask Away!

  1. Hey @TeamQuicko

    I have LTCG of more than 7 lakhs from the equity for this year. Is there a way to reduce my tax liability? Also, do I have to pay the tax in advance? If I fail to do so, what will be the penalty/interest percentage I have to pay during my tax filing in 2020?

  2. Hi @vivek25,

    You are liable to pay advance tax if your total outstanding tax liability for the financial year after TDS is above INR 10,000.

    To calculate your advance tax liability you need to add your estimated income for the financial year from all sources including - Salary, House Property, Capital Gains, Business & Profession and other sources.
    Next, subtract all eligible deductions, expenses, and Tax Credit available to you.
    Now, if your outstanding tax liability is above INR 10,000, you need to pay advance tax to avoid penalty u/s 234B and 234C.

    Hope this answers your query

    You can also use the advance tax calculator to know your advance tax liability under the old and new tax regime

  3. Hi
    When I pay the advance tax through the ZERODHA-QUICKO platform, does it get saved/stored? For example I have paid for Q1. so when I have to pay for Q2, will this be automatically calculated?
    Thanks

  4. I have paid the Advance tax of Q1, but didn’t received any email from income tax portal! So, Is that normal? I received the Challan No. receipt, but no email from IT portal!

  5. Hey @Gaurav,

    Once you pay the Advance Tax, you have an option to download the challan. In case you missed downloading it, the tax credit for the same will be reflected in your Form 26AS.

  6. Hey Girimon_Vasudevan,

    When you pay advance tax through our tax planner app, you should download the challan and then you
    need to add the it the advance tax toggle under the tax credits in the tax planner tab to see your tax credits reflected in the appropriate quarter.

  7. @Nireka
    Thanks. I have done it for the current year.
    I did not do it for the last year. How can I add it now?

  8. Hi @Girimon_Vasudevan,

    If you missed paying advance tax last year, then the interest penalty may be applicable u/s 234B & 234C.
    You can pay that as along with your self-assessment tax the filing your Income Tax Return

  9. Sorry, I didn’t miss the payment. I missed to add it in the tax credit on your portal. I am unable to add it now.

  10. @Girimon_Vasudevan, once you login to the Tax Planner navigate to Tax Planner > Income Situation > Tax Credits to add the tax credits.

    If you face any issue can write to us at help@quicko.com and our team will be happy to assist you.

Continue the conversation on TaxQ&A

12 more replies

Participants