Section 234B of the Income Tax Act

When one misses or forgets to pay advance tax, then he/she has to pay penalty in the form of interest under Section 234B of the Income Tax Act. This section is the second section of three sections of the Income Tax Act wherein interest is imposed by the IT department. This section talks about penalties and fines that the Income Tax department may impose for defaulters. The liabilities under this section may also arise when one becomes unable to pay advance taxes on time.

Read more
Save Tax
Upto ₹46,800 Under Sec 80C
Best Tax Saving Plans
  • High Returns

    Get Returns as high as 17%*
  • Zero Capital Gains tax^

    unlike 10% in Mutual Funds
  • Save upto Rs 46,800

    in Tax under section 80 C
We are rated~
58.9 Million
Registered Consumer
Insurance Partners
26.4 Million
Policies Sold
In-built life cover
Get Instant Tax Receipts
Save upto ₹46,800 in Taxes Under Section 80C
We don’t spam
View Plans
Please wait. We Are Processing..
Your personal information is secure with us
Plans available only for people of Indian origin By clicking on "View Plans" you agree to our Privacy Policy and Terms of use #For a 55 year on investment of 20Lacs #Discount offered by insurance company
Get Updates on WhatsApp
We are rated~
58.9 Million
Registered Consumer
Insurance Partners
26.4 Million
Policies Sold

Before knowing more about Section 234B in detail, let us first know about advance tax.

Advance Income Tax

If one has to pay Rs.10, 000 or more as taxes in a financial year, then you may be required to pay advance taxes. The meaning of advance tax is paying the dues of tax on the dates (most of the times quarterly) given by the income tax department. If one has not paid advance tax on time, then one may become liable to pay the interest as per Section 234B.

Who Should Pay Advance Tax?

All assesses even including the self-employed professionals, salaried employees, businessmen, etc. are needed to pay the Advance Tax. Here the payable tax even after reducing the TDS should be Rs.10, 000 or more.

Who Should Pay Interest Penalty as Per Section 234B?

All the businessmen, self-employed professionals, or salaried employees are needed to pay the Advance Tax where the payable tax is greater than or equal to Rs.10, 000. There are two main cases in which one has to pay the interest under Section 234B:

  • In case a taxpayer is required to pay the advance tax but he/she fails to do so.
  • In case a taxpayer has paid out the advance tax but the paid amount is less than 90% of the liable tax.

Payable Tax under Section 234B of Income Tax

The interest that is payable in Section 234B is applied only when:

  • The liabilities of tax for an individual for the financial year after the deduction of TDS is more than Rupees 10, 000 and he/she has not paid any advance tax.


  • One has paid the advance taxes and the paid advance tax is not more than or equal to 90% of the ‘assessed tax’.

The interest under Section 234B is applicable in any of the above-mentioned cases. The interest is calculated at the rate of 1% on the assessed tax less the advance tax. The part of a month is rounded off into full month. The money on which the interest is calculated is as well rounded off in a way that some fraction of 100 can be ignored.

Save Tax Invest Today Save Tax Invest Today

Calculation of Section 234B of Income Tax

Let us take examples to understand Section 234B of the Income Tax Act:

  • Example 1: A’s total tax liabilities are Rs.48, 000. She has paid this mentioned amount on 13th June while filing her Income Tax Return. However, no tax at the source. Since her total tax liability is more than Rs.10, 000, therefore she has to pay advance tax. So, Mrs. A is also liable to pay interest as per Section 234B of the Income Tax Act. The total calculation of interest, in this case, is Rs.48, 000 X 1% X 3 (for April, May, and June) = Rupees. 1, 440. In this way, Mrs. A has to pay Rs.1, 440 as interest under section 234B of the Income Tax Act.
  • Example 2: The total tax that Mr. B has to pay for the financial year is Rs.55, 000, from which he has paid Rs.47, 000 by 31st March as a part of advance tax. However, the remaining amount of Rs.8, 000 is paid by him while he was filing the Income Tax Return on May 30th. Even though Mr. B has paid the advance tax, but we should check whether the advance tax paid is 90% of his total tax liability or not. A total payable tax of Mr. B is Rs.55, 000 and 90% of this taxable amount are Rs.49, 500. Mr. B has paid Rs.47, 000, which is not equal to 90% of the liable tax. Therefore, he has to pay interest as per Section 234B of the Income Tax Act.

Calculation of Interest in This Case is:

Rs.55, 000 (assessed tax) – Rs.47, 000 (advance tax) = Rs.8, 000

8, 000 X1% X 2 (April and May) = Rs. 160

The interest that Mr. B has to pay with his tax liability as per Section 234B is Rs.160.

Who Should Not Pay Advance Tax?

The following categories of people or taxpayers do not have to pay any Advance Tax:

  • If the taxpayer is a senior citizen (more than 60 years of age) who do not have any income from profession or business is not needed to pay the advance tax.
  • If the taxpayer takes the presumptive scheme to calculate business income as per Section 44AD at a turnover of 8%, then he/she will be free from paying any Advance Tax for business.

Read More: Income Tax Login

*All savings are provided by the insurer as per the IRDAI approved insurance plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
~Source - Google Review Rating available on:-

Income Tax articles

Recent Articles
Popular Articles
Withholding Tax

02 Jul 2024

Withholding tax, also known as Tax Deducted at Source (TDS) in
Read more
Section 80EEA - Deduction for Interest on Home Loan

05 Jun 2024

Section 80EEA of the Income Tax Act provides a significant tax
Read more
Section 80CCE of the Income Tax Act

29 May 2024

Section 80CCE of the Income Tax Act provides taxpayers with
Read more
Section 80CCC of the Income Tax

06 May 2024

Section 80CCC, part of the broader 80C category in the Income
Read more
Income Tax Proof

28 Feb 2024

Income tax proofs play an important role during tax assessment
Read more
Deductions in New Tax Regime under Union Budget 2024
  • 14 Feb 2020
  • 40333
The Union Budget on 23 July 2024 declared an increase in the standard deduction of the new tax regime from
Read more
What is Form 16 & How to Download It
  • 17 Jan 2017
  • 215590
Form 16 is a crucial document in India for salaried individuals. Issued by your employer, it acts as a bridge
Read more
Leave Encashment Tax Exemption - Section 10(10AA)
  • 04 Jan 2024
  • 3891
Leave Encashment Tax Exemption under Section 10(10AA) provides a significant financial benefit for employees
Read more
Section 80CCD (1) and 80CCD (2)
  • 28 Mar 2023
  • 11302
The Government of India notifies pension schemes that can help salaried and self-employed individuals to get tax
Read more

Download the Policybazaar app
to manage all your insurance needs.