Section 234C of Income Tax - Interest for deferment of Advance Tax

SECTION 234C OF INCOME TAX - DEFERMENT OF ADVANCE TAX INTEREST

Every Income Taxpayer who is liable to pay advance tax needs to pay the same in 4 installments during the Financial year which is as under :

1.On or Before 15th June - 15% of total tax as per returned income

2. On or before 15th Sept. - 45% of total tax as per returned income

3. On or before 15th Dec. - 75% of total tax as per returned income

4. On or before 15th March - 100% of total tax as per returned income

If a person fails to pay the advance tax as per the installments above, he/she is liable to pay interest under 234C for deferment of advance tax which is:

(a) 1% per month for 3 months if the installments are not paid in June, Sept., and Dec.

(b) 1% if the installment of March is not paid

The interest for the June & Sept. installments will not be charged if 12% & 36% of the tax has been paid before 15th June & 15th Sept. respectively.

In case the return is filed u/s 44AD or 44ADA i.e. presumptive taxation schemes, the liability to pay advance tax arises on or before 15th March i.e. the whole amount of tax should be paid before 15th March only. If the same is not paid, interest u/s 234C will be charged @ 1% for one month.

Interest u/s 234C is not to be charged in the following cases :

1.In case of failure to estimate Capital Gains income

2. In case of failure to estimate Dividend Income

3. In case of new business, for the first year of operations

In all the above cases, the advance tax should be paid after the income first arises in installments which fall due after the occurrence of these incomes.

For calculating tax due on returned income, the following will be deducted from the total tax liability as per returned income i.e.

(a) Any TDS or TCS

(b) Any relief u/s 89, 90, 90A or 91

(c) Any tax credit u/s 115JAA or 115JD

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