Interest
Section 234B Interest — Default in Payment of Advance Tax
Section 234B charges interest at 1% per month when advance tax paid is less than 90% of assessed tax. The interest runs from April 1 of the assessment year to the date of determination of total income.
Response Deadline
N/A — interest is automatic
Extension
Not available
New IT Act
Section 234B
What Does This Notice Mean?
You were required to pay advance tax but either did not pay it or paid less than 90% of the assessed tax liability. Interest at 1% per month is charged on the shortfall.
Common Triggers
- Not paying advance tax when tax liability exceeds Rs 10,000
- Advance tax paid is less than 90% of assessed tax
- Additions in assessment increasing the tax liability
How to Respond
- 1Verify whether advance tax was actually required (tax liability must exceed Rs 10,000)
- 2Check if the 90% threshold is correctly computed
- 3Verify all advance tax payments are correctly credited
- 4If interest was charged on additions made in assessment, note that interest on additions may be contested
- 5File 154 rectification if advance tax credits are missing
Consequences of Non-Compliance
Simple interest at 1% per month from April 1 of the AY to the date of assessment. If assessed tax exceeds returned income, additional 234B interest is charged.
Frequently Asked Questions
When is advance tax required?
Advance tax is required if your estimated tax liability for the year exceeds Rs 10,000 (after TDS). Senior citizens (60+) without business income are exempt.
Related Sections
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Disclaimer: This content is for informational purposes only and does not constitute legal or tax advice. Always consult a qualified Chartered Accountant or tax professional for advice specific to your situation. AI-generated content should be reviewed by a professional before use.