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Charging Interest u/s 234B and 234C in your ITR

Updated on: 23 Nov, 2023 01:22 AM

While checking the acknowledgement of your ITR filed, you might have sometime witnessed interest u/s 234B and 234C. Looking at it you are left confused and find hard to interpret the reason of such levy. We help you grasp all about, why such amount is charged in your income tax return.

What is 234B and 234C?

234B and 234C are interest sections which relate to payment of advance taxes.

What is advance tax?

Any taxpayer having total taxes due in a year exceeding Rs.10,000/- is required to pay such amount in installments to the income tax department. Such payment of installments is known as payment of advance tax.

When is advance tax required to be paid?

The time limit for payment of advance tax for individual and corporate taxpayers (except those opting for presumptive taxation u/s 44AD) is

Due Date Advance Tax payable
On or before 15th June 15% of estimated Advance Tax
On or before 15th September 45% of estimated Advance Tax
On or before 15th December 75% of estimated Advance Tax
On or before 15th March 100% of estimated Advance Tax

When interest under section 234B and 234C is charged?

Interest under section 234B and 234C is charged on happening of following events

  • 234B – Non payment or short payment of advance tax i.e. paying less than 90% of tax in advance
    Interest @ 1% per month or part of month is levied from 1st April following financial year till the date of actual payment of tax.
  • 234C – Non payment or short payment of individual installments of advance tax.
    Interest @ 1% per month or part of month is levied

Who is required to pay advance tax?

Any person having total tax payable in a year exceeding Rs. 10,000/- is liable to pay tax in advance. The advance tax shall be paid as per the installments prescribed by the income tax department, which have been quoted above.The payer of advance tax can be anyone like a salaried person, a professional, person carrying his own business, or someone having income from other sources.

Click here to know more about interest under section 234A, 234B or 234C

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CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.