Interest Payable Under Section 234A, 234B, and 234C

As the deadline for advance tax payment (especially the last installment due on 15th March) approaches, taxpayers and tax professionals gear up to compute and pay the correct amount to avoid interest and penalties.
The Income Tax Act, 1961 has laid down strict provisions under Sections 234A, 234B, and 234C for charging interest in case of:

What Are Sections 234A, 234B & 234C All About?
Think of your tax journey like taking a flight:

🔷 234A = Late arrival at the airport (filing return late)
🔷234B = Not buying your ticket in advance (not paying advance tax)
🔷234C = Boarding the wrong gate at wrong time (not paying tax in the correct installment)

Section 234A – Interest for Delay in Filing Return
If you miss the due date to file your Income Tax Return (usually 31st July for individuals), the government charges you interest.

🔢 Interest:
1% per month or part thereof
From the due date to the actual filing date
On the tax due after TDS and advance tax

🧮 Example:
Ravi had a tax liability of ₹80,000 after adjusting for TDS. He filed his return on 31st October, 3 months late.
Interest = ₹80,000 × 1% × 3 = ₹2,400

Section 234B – Interest for Non-payment or Shortfall in Advance Tax
If you don’t pay at least 90% of your total tax as advance tax by 31st March, you pay interest under Section 234B.

🔢 Interest:
1% per month
From 1st April of assessment year till actual date of tax payment

🧮 Example:
Anjali had total tax of ₹1,00,000 for FY 2024–25 but paid only ₹60,000 as advance tax. She paid the balance ₹40,000 on 20th July 2025 while filing ITR.
Period = April to July = 4 months
Interest = ₹40,000 × 1% × 4 = ₹1,600

Section 234C – Interest for Deferment of Advance Tax Installments
Even if you pay advance tax, if you miss the scheduled installment deadlines, you’ll be charged interest.

🧮 Example:
Kunal’s total tax liability is ₹1,00,000. He paid ₹10,000 in June, ₹20,000 in Sept, ₹30,000 in Dec, and ₹40,000 in March.
Let’s see the shortfall:
June: Should pay ₹15,000 → Paid ₹10,000 → Shortfall = ₹5,000
Sept: Should pay ₹45,000 → Paid total ₹30,000 → Shortfall = ₹15,000
Dec: Should pay ₹75,000 → Paid total ₹60,000 → Shortfall = ₹15,000
Interest = 1% for each shortfall month per quarter
June Shortfall = ₹5,000 × 1% × 3 = ₹150
Sept Shortfall = ₹15,000 × 1% × 3 = ₹450
Dec Shortfall = ₹15,000 × 1% × 3 = ₹450
Total Interest = ₹1,050

🔢 Due Dates & Installments: