Income Tax Department wants you to pay your Advance Tax in 4 installments to ease the burden of the tax. These installments must be paid on or before the due date. If you fail to do so, then tax department can impose interest penalty u/s 234C.
Advance tax payments must be paid on the following dates of a financial year:
|On or Before||In case of all taxpayers other than taxpayer opting for presumptive income u/s 44AD||Taxpayers opting for presumptive income u/s 44AD|
|15th June||15% of Assessed Tax||NIL|
|15th September||45% of Assessed Tax||NIL|
|15th December||75% of Assessed Tax||NIL|
|15th March||100% of Assessed Tax||Up to 100% of advance tax payable|
The interest for late payment is set at 1% simple interest on the amount of tax due, calculated from the individual cut-off dates shown above, till the date of actual payment of outstanding taxes.
Calculation of Interest under section 234C
A Tax Payer other than opting for presumptive income u/s 44AD
|Advance Tax Paid||Rate of Simple Interest||Period of Interest||Amount on which Interest is calculated|
|On or before June 15 is less than 15% of the Amount*||1% per month||3 months||15% of Amount* less tax already deposited before June 15|
|On or before September 15 is less than 45% of the Amount*||1% per month||3 months||45% of Amount* less tax already deposited before September 15|
|On or before December 15 is less than 75% of the Amount||1% per month||3 months||75% of Amount* less tax already deposited before December 15|
|On or before March 15 is less than 100% of the Amount*||1% per month||_||100% of Amount* less tax already deposited before March 15|
Here Amount on which Interest is calculated is the tax on total income less TDS less relief u/s 90 or 91 less tax credit u/s 115JD.
- If the shortfall in payment of Advance Tax occurs due to capital gains or winning lottery, etc. then no interest is levied on the taxpayer.
- The taxpayer has paid in full – tax payable on the income mentioned above, while paying remaining installments of advance tax due, or if no installments are due, the taxpayer pays them before the end of the financial year.
Consider that Aman total tax liability for this financial year is Rs. 100,000 and he paid Rs. 5,000 before 15th June, Rs. 25000 before 15th Sep, 35,000 before 15th December. He had some shortfall in every installment he paid. So by 31st of March, he paid total Rs. 53,000. The remaining Rs.50,000 was paid on 10th of July next year while filing the tax return.
If however, you made partial payments instead, you will be liable to pay interest as per the last column in the table below:
|Payment Dates||Advance Tax payable||Total Advance Tax paid||Shortfall (Cumulative)||Penalties (Cumulative)|
|15th June||15,000||5,000||10,000||@1% * 3*10,000 = 300|
|15th September||45,000||25,000||20,000||@1% * 3 *20,000=600|
|15th December||75,000||35,000||40,000||@1% * 3 *40,000=1200|
|15th March||1,00,000||50,000||50,000||1% * 1 *50,000=500|
Total Interest Payable is Rs 2600.
For any help on ITR Filing feel free to consult the tax experts at LegalRaasta. You can file ITR yourself via our ITR software or get CA’s help on filing income tax return. You can also use the option of Business Return, Bulk Return or Revised Return Filing