BooksIQInterest @ 1% per month (simple) on the shortfall of advance tax — payable when advance tax paid by 31-Mar is less than 90% of assessed tax.
Key points
- §234A levies interest at 1% per month for delay in filing the ITR, computed on the outstanding tax multiplied by the number of months from the due date to the filing date.
- §234B levies interest at 1% per month for SHORTFALL of advance tax — applicable when the advance tax paid is below 90% of assessed tax;
- computed from 01-April of the AY to the date of assessment or payment of self-assessment tax.
- §234C levies interest at 1% per month for DEFERMENT of advance-tax instalments, computed per-quarter on each instalment shortfall.
- All three are SIMPLE INTEREST.
- Fractional months are rounded UP to a full month.
- A common trap is that §234B and §234C run in parallel — both can apply on the same default.
- Senior citizens with no business income are EXEMPT from advance tax (and therefore from §234B and §234C).
Reference: §234A / §234B / §234C, ITA 1961 — under ITA 2025 (FY 26-27 onwards), this is §424
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