Section 234C of the Income Tax Act

The Income Tax Department of India wants to make advance tax payment convenient and easy for its taxpayers. For the same, it provides the option of paying advance tax in four installments during one financial year. However, if one still defaults, then there the income tax department may impose interest penalty under Section 234C of the Income Tax Act. Basically, Section 234C is one of the three parts of Section 234 under which the interest is imposed by the Income Tax department.

Read more
Best Tax Saving Plans
  • High Returns

    Get Returns as high as 15%*
  • Zero Capital Gains tax

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

    in Tax under section 80 C

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Get Instant Tax Receipts
Save upto ₹46,800 in Taxes Under Section 80C
+91
View Plans
Please wait. We Are Processing..
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 Tax benefit is subject to changes in tax laws
Get Updates on WhatsApp

The Due Dates for Advance Tax Payments

The IT department wants on-time payment of the taxes by taxpayers; otherwise, it may charge interest on the late payments when one files income tax returns. The advance tax can be paid on the below-mentioned dates:

Before or On

In the situation when all the taxpayers other than taxpayer choosing presumptive income under section 44AD

The taxpayers choosing presumptive income under section 44AD

June 15th

Up to 15percent of the payable advance tax

NIL

September 15th

Up to 45 percent of the payable advance tax

NIL

December 15th

Up to 74 percent of the payable advance tax

NIL

March 15th

Up to 100 percent of the payable advance tax

Up to 100 percent of payable advance tax


Interest imposed under Section 234C

The interest for late payment of the advance tax is set as 1 percent of the total due amount. This amount is calculated from the above mentioned cut-off dates to the actual payment of the taxes that are outstanding.

Interest calculation under Section 234C when the taxpayer other than the one who is opting for presumptive income under Section 44AD:

 

Interest Rate

Interest Period

Amount of Interest Calculation

If the paid advance tax on or before 15th June is less than 15% of the total payable amount*

Simple interest is applied at the rate of 1% each month

3 months

15% of the Amount* (-) minus the tax amount that is deposited before 15th June

If the paid advance tax on or before 15th September is less than 45% of the total payable amount*

Simple interest is applied at the rate of 1% each month

3 months

45% of the Amount* (-) minus the tax amount that is deposited before 15th September

If the paid advance tax on or before 15th December is less than 75% of the total payable amount*

Simple interest is applied at the rate of 1% each month

3 months

75% of the Amount* (-) minus the tax amount that is deposited before 15th December

If the paid advance tax on or before 15th March is less than 100% of the total payable amount*

Simple interest is applied at the rate of 1% each month

-

100% of the Amount* (-) minus the tax amount that is deposited before 15th March


Here the amount on which the % of the advance tax is needed to be calculated = Tax on the Total Income (minus) TDS (minus) relief under section 90 or 91 (minus) tax credit under section 115JD.

Note: Some of the points to be noted here are:

  • No interest is levied on the taxpayer if there is any kind of shortfall in the payment of the advance tax due to the winnings or capital gains through lottery or gambling.
  • If the tax is paid is on account of failure or underestimation to estimate the capital gains or some speculative income such as income from gambling or income through lottery.
  • If the taxpayer has paid the full tax payable on the mentioned income while paying the rest of the installments of due advance tax or if there is not any due of installment, then the taxpayer pays these taxes before completion of the financial year.

Illustrations to Understand Section 234C

Let us assume that the total tax liability of an individual for a financial year is Rs.100, 000 and it is required to be paid in installments as mentioned in the above tables. However, we are assuming that there is no deduction of TDS here.

If one makes partial payments, then he/she is liable to pay the interest according to the last column of the below table:

Date of Payment

Payable Advance Tax

Total Paid Advance Tax

Cumulative Shortfall

Cumulative Penalties

June 15th

15, 000

5, 000

10, 000

1% * 3 * 10, 000 = 300

September 15th

45, 000

20, 000

25, 000

1% * 3 *25, 000 = 750

December 15th

75, 000

40, 000

35, 000

1% * 3 * 35, 000 = 1050

March 15th

1, 00, 000

50, 000

50, 000

1% * 1 * 50, 000 = 500

Total Payable Interest = Rs.2600

Tax Saving Investment
Save Tax Under Section 80C

Income Tax articles

Recent Articles
Popular Articles
Income Tax Above 10 Lakh

10 Jun 2022

Every year on the 1st of February, the Government of India...
Read more
Investment Declaration with Form 12BB

08 Jun 2022

Tax planning is vital for salaried individuals to streamline...
Read more
NPS Tax Savings

08 Jun 2022

NPS or National Pension Scheme is a voluntary pension plan...
Read more
How is Short-Term Capital Gains Tax Calculated on Shares?

08 Jun 2022

Any property or security in your name is a capital asset for...
Read more
How to Save TDS on Interest with Form 15G and 15H?

08 Jun 2022

Fixed deposits are the safest investment vehicles for most...
Read more
Tax Saving Investments
Tax Saving Investments are an integral part of one’s life as they offer tax deductions under section 80C or...
Read more
Income Tax Above 5 Lakh
Income tax is the tax levied on the income earned by an individual through any source and hence is taxable in the...
Read more
Cost Inflation Index
We all have read in the school books, never took it seriously as a child, and now it has become the most...
Read more
Gratuity Eligibility Before and After Completion of 5 Years
An employee is a person who is hired by an organization to work in a specific field that they have expertise in...
Read more
SBI PPF Calculator
Public Provident Fund or PPF is a complete Government-backed investment scheme offered to all individuals, both...
Read more
top
Close
Download the Policybazaar app
to manage all your insurance needs.
INSTALL