ring
Section-234C

Section 234C of Income Tax Act

Section 234C of Income Tax

Advance tax is an income tax mechanism that facilitates the taxpayers to make their payments in multiple instalments instead of forcing them to spend on a single remittance at the end of the financial year. Like all tax payments, advance tax should be remitted within the due dates specified by the Income Tax Department. Section 234C of Income Tax Act deals with the penal provisions applicable for non-remittance of advance tax within the specified due date.

Highlights of the Section

The following are the salient features of this section:

  • Interest under this section is charged if the taxpayer defaults in the payment of advance taxes within the dates specified by the Income Tax Department.
  • The nature of interest imposed here is simple interest.
  • Any fraction of a month will be deemed to be a full month for the calculation of interest.
  • During the calculation of interest, the total income tax liability will be rounded off to the nearest multiple of 100. Any fraction of 100 is ignored.

Due Dates of Advance Tax Payment

The following due dates are applicable for the payment of advance tax:

Quantum of Tax PayableDue Date
15% of the total liability15th June
45% of the total liability15th September
75% of the total liability15th December
100% of the total liability15th March

Calculation of Interest

Section 234C is imposed on taxpayers who fail to remit the liability of instalments within the due dates specified above. While the rate of interest is commonly fixed at the rate of 1% for all taxpayers, the source of calculation varies.

Presumptive Taxation Scheme/Section 44AD

Taxpayers under the umbrella of presumptive taxation scheme of Section 44AD are not required to make their payments in instalments but are necessitated to remit the entire amount of liability by the 15th of March every financial year. The simple interest would be calculated at the rate of 1% per month.

Other Taxpayers

The source of calculation of tax rates for other taxpayers are determined by the date of payment, which is as follows:

  • If Advance Tax is remitted within the 15th of June – 12% of the total tax liability.
  • If Advance Tax is remitted within the 15th of September – 36% of the total tax liability.
  • If Advance Tax is remitted within the 15th of December – 75% of the total tax liability.
  • If Advance Tax is remitted before the 15th of March – 100% of the total tax liability.

The formula given below is recommended for determining the amount on which the percentage of advance tax is calculated: 

 Tax on total income (-) TDS (-) relief u/s 90 or 91 (-) tax credit us/ 115JD.

Non-Applicability

Interest under Section 234C is not applicable in the event of underestimation or failure in valuing the amount of capital gains or speculative income such as lottery income, gambling income, and the likes of it.

Period of Levy

Interest under Section 234C is imposed for a period of three months for any shortfall in the payment of 1st, 2nd, and 3rd instalments. Any shortfall in the fourth instalment will lead to an interest levy that is valid for a period of one month.

Other Related Guides

Delay in Advance Tax Payment Delay in Advance Tax Payment Taxpayers who are having a tax liability of more than Rs.10,000 should remit Advance Tax to the government before the du...
Income Tax Scrutiny Income Tax Scrutiny Income-tax scrutiny refers to the act of summoning taxpayers for making enquiries about the returns filed in relation to an asses...
E-Proceedings under Income Tax E-Proceedings under Income Tax E-proceedings refers to a digital platform for conducting scrutiny assessment proceedings in an end to end manner. The...
Advance Tax Payment Advance Tax Payment - Section 208 of Income Tax Any person having an estimated tax liability of Rs.10,000 or more in a year is required to pay advanc...
IAS 38: Intangible Assets IAS 38: Intangible Assets IAS 38: Intangible Assets outlines the accounting requirements for intangible assets. Intangible assets are non-monetary as...

Post by Sreeram Viswanath

IndiaFilings is India's largest online compliance services platform dedicated to helping people start and grow their business, at an affordable cost. We were started in 2014 with the mission of making it easier for Entrepreneurs to start their business. We have since helped start and operate tens of thousands of businesses by offering a range of business services. Our aim is to help the entrepreneur on the legal and regulatory requirements, and be a partner throughout the business lifecycle, offering support at every stage to ensure the business remains compliant and continually growing.

User

Hi there,

Online We are available online!