Missing the September 15 deadline for advance tax payment can cost you more than 15% additional tax payment
If your income tax liability amounts to Rs 10,000 or more, you are required to pay advance tax. It's necessary to make these payments within specific schedules rather than waiting until the end of the financial year. Failure to do so will result in the income tax department charging interest on any delayed payments.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
What is the advance tax payment schedule that you have to follow
You have to pay advance tax in each quarter if your tax liability is above the cut- off. For the first quarter of FY 2024-25, the last day of advance tax payment was June 15. For FY 2024-25 (AY 2025-26), the next installment of advance tax needs to be paid on or before September 15, 2024. The table below shows what are the payment schedules for advance tax.
How missing the advance tax deadline can cost you more than 15% extra due to interest
Depending on the circumstances and facts of the case you might be required to pay interest on pending advance tax if you default on paying on time. Experts say that the interest can be charged under section 234 A/B/C.Interest under section 234A: Interest under section 234A is levied when a taxpayer fails to furnish their ITR (including belated and updated return) or when the taxpayer files an income tax return after the designated deadline.
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"If the taxpayer filed her return of income after the due date prescribed u/s 139 (1) or the extended due date as the case may be, interest u/s 234A will be charged at 1% per month or part of the month on the amount of tax payable by the taxpayer as on the due date. Hence, it is requested that interest u/s 234A is computed correctly," said the Income Tax Department.
1
Interest under section 234A
Simple interest @ 1% per month or part of the month
From the designated deadline for filing of tax return till the actual date of filing of tax return by the taxpayer / the date of completion of assessment by the tax officer
2
Interest under section 234B
From first day of next financial year (1st April, 2025 for computation of interest for FY 2024-25) till the date of paying the balance tax liability
Source: Yogesh Kale, Executive Director, Nangia Andersen India
Interest under section 234B: "Interest u/s 234B will be charged if a taxpayer fails to pay at least 90% of the total tax liability after relief as advance tax. The interest is computed at the rate of 1% for every month or part of a month comprised in the period from 1st April of the assessment year to the date of determination of total income u/s 143(1) on the amount which the advance tax paid as aforesaid falls short of the assessed tax. Hence it is requested that interest u/s 234B is computed correctly by the taxpayer at the time of filing return of income," stated the Income Tax Department website.
"If tax liability (after considering relief under sections 89 and 90) exceeds ?10,000 and advance tax is not paid, interest under Section 234B applies. If the taxpayer files an updated ITR reducing the advance tax liability, the interest under this section is adjusted accordingly," says Soni.
The table below shows how missing the advance tax deadline can cost more than 10% in certain circumstances. For example: , calculations shown in the table below shows that if you had a tax liability of Rs 15,000 on April 1, 2024 and paid this on July 31, 2025 then you need to pay Rs 17,400 which is 16% more payment than the original tax liability. If we take the example of Rs 25,000 then the extra payment comes to 18% (29,500-25,000/25,000*100= 18%)
Source: CA Abhishek Soni, co-founder, Tax2WinInterest under section 234C: "Generally, interest under section 234C is levied when the taxpayer fails to pay advance tax or the advance tax paid by the taxpayer is less than the quarterly threshold of advance tax payable. Interest under section 234C is calculated based upon the total tax liability as per the tax return. In case of shortfall in payment of advance tax in the first 3 quarters, interest @ 3% of the shortfall is leviable, whereas interest @ 1% is leviable for shortfall in the last quarter," says Yogesh Kale, Executive Director, Nangia Andersen India.
How is interest calculated for failure to pay advance tax
Kale says that the interest under sections 234 A/B/C is computed on a monthly basis, regardless of the date of payment of tax during the month. "Even if tax is paid on July 1, 2025, interest for the whole of July would be applicable. It may be possible to take a position that since the tax is paid on 1st July, for no part of July the tax remained unpaid, and hence interest is not applicable for July. However, the tax department may have a different view," says Kale.Soni concurs with Kale and adds: "Since interest is calculated on a monthly basis or "part of the month," if you pay your tax on July 1, you will still incur interest for the entire month of July. So even if you're just one day late, the interest for the full month applies."
When can the tax department levy interest under section 234F
"Fee u/s 234F will be charged if the taxpayer defaults in furnishing return of income within the prescribed time limit u/s 139(1) of the Income Tax Act, 1961. An amount of Rs 5000 is charged as fee u/s 234F if the total income exceeds Rs 5,00,000. In other cases, an amount of Rs 1,000 shall be levied as fee u/s 234F. Hence, it is requested that fee u/s 234F is computed correctly by the taxpayer at the time of filing her return of income," said the Income Tax Department.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
This story originally appeared on: India Times - Author:Faqs of Insurances
