Interest under Section 234C will be levied where you are liable to pay advance tax but has not paid advance tax as per installments, then you will be liable to pay a simple interest of 1% p.m. or part of the month for the period of delay.


Advance tax is paid on the following dates:


This is for both Individual and Companies


Due Date

Advance Tax Payable


On or before 15th June


15% of advance tax


On or before 15th September


45% of advance tax


On or before 15th December


75% of advance tax


On or before 15th March


100% of advance tax



For taxpayers who have opted for Presumptive Business Taxation Scheme

 

Due Date

Advance Tax Payable


By 31st March

100% of advance tax


 

For taxpayers opting for presumptive taxation having business income from plying, hiring or leasing of goods carriages Section 44AE


Due Date

Advance Tax Payable

 

On or before 15th June

 

15% of advance tax

 

On or before 15th September

 

45% of advance tax

 

On or before 15th December

 

75% of advance tax

 

On or before 15th March

 

100% of advance tax

 


Calculation of Interest under section 234C

 

Particulars

 

Rate of Interest

 

Period of Interest

 

Amount on which Interest is calculated

 

Where, if Advance Tax paid on or before June 15 is less than 15% of the Amount

 

Simple interest @1% per month or part of the month

 

3 months

 

15% of Amount less advance tax paid on or before June 15

 

Where, if Advance Tax paid on or before September 15 is less than 45% of the Amount

 

Simple interest @1% per month or part of the month

 

3 months

 

45% of Amount less advance tax paid on or before September 15

 

Where, if Advance Tax paid on or before December 15 is less than 75% of the Amount

 

Simple interest @1% per month or part of the month

 

3 months

 

75% of Amount less advance tax paid on or before December’ 15

 

Where, if Advance Tax paid on or before March 15 is less than 100% of the Amount

 

Simple interest @1% per month or part of the month

 

1 month

100% of Amount less advance tax paid on or before March 15

 

 

* Amount on which interest is computed shall be = Tax on Total Income for the year less TDS less relief u/s 90 or 91 less tax credit u/s 115JD(if any).

* Such Interest will be calculated up to 31st March of the financial year (after 31st March of financial year the interest will be calculated under section 234B.

 

How is interest u/s 234C calculated?


Let’s understand with an Illustration:


Suppose Mr. Gagandeep has a total tax liability for this financial year is Rs. 100,000 and he paid Rs. 5,000 before 15th June, Rs. 25000 before 15th Sep, 35,000 before 15th December. He had some shortfall in every installment he paid. So by 31st of March, he paid total Rs. 53,000. However Rs.50,000 was paid on 10th of July next year while filing the tax return.


If however, you made partial payments instead, you will be liable to pay interest as per the last column in the table below:


Payment Due Dates

Advance Tax payable

Total Advance Tax paid

Shortfall (Cumulative)

Penalties (Cumulative)

15th June

15,000

5,000

10,000

@1% x 3 x10,000 = 300

15th September

45,000

25,000

20,000

@1% x 3 x20,000=600

15th December

75,000

35,000

40,000

@1% x 3 x40,000=1200

15th March

1,00,000

50,000

50,000

@1% x 1 x 50,000=500


Therefore, Total Interest Payable is Rs 2600.