Section 234C of the Income Tax Act, 1961 deals with the provisions related to the interest for default in payment of advance tax. It states that if an individual or a company fails to pay the advance tax or pays less than 90% of the assessed tax liability before the end of the financial year, then interest will be charged for the default.
The interest is calculated at the rate of 1% per month or part of the month for the period of default. The interest is calculated from the due date of payment of advance tax till the date on which the tax is actually paid.
There are three instalments of advance tax payment that an individual or a company needs to make. The due dates for these instalments are:
On or before 15th June – At least 15% of the assessed tax liability
On or before 15th September – At least 45% of the assessed tax liability, less the tax paid in the first instalment
On or before 15th December – At least 75% of the assessed tax liability, less the tax paid in the first two instalments.
If the taxpayer fails to pay the advance tax or pays less than 90% of the assessed tax liability by the due dates mentioned above, then interest will be levied under section 234C.
