Section 234C of the Income Tax Act imposes interest on taxpayers who fail to pay their taxes on time during the fiscal year. The interest is calculated on the amount of tax that should have been paid as advance tax. The following are the key points related to interest under Section 234C:
Interest under Section 234C is levied for default in payment of advance tax.
The interest is calculated at 1% per month or part of a month on the amount of tax that should have been paid as advance tax.
The interest is calculated from the due date of payment of each instalment of advance tax until the actual date of payment.
The interest is calculated separately for each instalment of advance tax that is not paid on time.
If the taxpayer has paid less than 90% of the assessed tax liability as advance tax, then interest under Section 234C will be levied.
If the taxpayer meets certain criteria, they may be exempt from paying advance tax and, as a result, interest under Section 234C may not be assessed.
The interest under Section 234C is simple interest, which means that it is calculated on the outstanding amount of tax and not on the interest already charged.
