Section 234C - Interest for deferment of advance tax - Income-tax Act, 1961

1 [Interest for deferment of advance tax. 234C. (1) 2 [Where in any financial year,- 13 [(a) an assessee, other than 18 [the assessee referred to in clause (b)], who is liable to pay advance tax under section 208 has failed to pay such tax or- (i) the advance tax paid by such assessee on its current income on or before the 15th day of June is less than fifteen per cent. of the tax due on the returned income or the amount of such advance tax paid on or before the 15th day of September is less than forty-five per cent. of the tax due on the returned income or the amount of such advance tax paid on or before the 15th day of December is less than seventy-five per cent. of the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of one per cent. per month for a period of three months on the amount of the shortfall from fifteen per cent. or forty-five per cent. or seventy-five per cent., as the case may be, of the tax due on the returned income; (ii) the advance tax paid by the assessee on the current income on or before the 15th day of March is less than the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of one per cent. on the amount of the shortfall from the tax due on the returned income: Provided that if the advance tax paid by the assessee on the current income, on or before the 15th day of June or the 15th day of September, is not less than twelve per cent. or, as the case may be, thirty-six per cent. of the tax due on the returned income, then, the assessee shall not be liable to pay any interest on the amount of the shortfall on those dates;] ( b ) 14 [ 19 [ an assessee who declares profits and gains in accordance with the provisions of sub-section (1) of section 44AD or sub-section (1) of section 44ADA, as the case may be ] who is liable to pay advance tax under section 208 has failed to pay such tax or the advance tax paid by the assessee on its current income on or before the 15th day of March is less than the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of one per cent. on the amount of the shortfall from the tax due on the returned income:]] 7 [Provided that nothing contained in this sub-section shall apply to any shortfall in the payment of the tax due on the returned income where such shortfall is on account of under-estimate or failure to estimate- ( a ) the amount of capital gains; or ( b ) income of the nature referred to in sub-clause ( ix ) of clause ( 24 ) of 15 [section 2; or] 16 [(c) income under the head Profits and gains of business or profession in cases where the income accrues or arises under the said head for the 20 [ first time; or ]] 24 [ (d) the amount of dividend income, ] and the assessee has paid the whole of the amount of tax payable in respect of income referred to in clause ( a ) 17 [or clause (b) or clause (c)] 22 [ or clause (d)], as the case may be, had such income been a part of the total income, as part of the 8 [remaining instalments of advance tax which are due or where no such instalments are due], by the 31st day of March of the financial year:] 9 [ Provided further that nothing contained in this sub-section shall apply to any shortfall in the payment of the tax due on the returned income where such shortfall is on account of increase in the rate of surcharge under section 2 of the Finance Act, 2000 (10 of 2000), as amended by the Taxation Laws (Amendment) Act, 2000 (1 of 2001), and the assessee has paid the amount of shortfall, on or before the 15th day of March, 2001 in respect of the instalment of advance tax due on the 15th day of June, 2000, the 15th day of September, 2000 and the 15th day of December, 2000 :] 10 [Provided also that nothing contained in this sub-section shall apply to any shortfall in the payment of the tax due on the returned income where such shortfall is on account of increase in the rate of surcharge under section 2 of the Finance Act, 2000 (10 of 2000) as amended by the Taxation Laws (Amendment) Act, 2001 (4 of 2001) and the assessee has paid the amount of shortfall on or before the 15th day of March, 2001 in respect of the instalment of advance tax due on the 15th day of June, 2000, the 15th day of September, 2000 and 15th day of December, 2000.] 11 [ 25 [Explanation 1] .- In this section, tax due on the returned income means the tax chargeable on the total income declared in the return of income furnished by the assessee for the assessment year commencing on the 1st day of April immediately following the financial year in which the advance tax is paid or payable, as reduced by the amount of,- (i) any tax deductible or collectible at source in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income; 23 [ (ia) any relief of tax allowed under section 89; ] (ii) any relief of tax allowed under section 90 on account of tax paid in a country outside India; (iii) any relief of tax allowed under section 90A on account of tax paid in a specified territory outside India referred to in that section; (iv) any deduction, from the Indian income-tax payable, allowed under section 91, on account of tax paid in a country outside India; and (v) any tax credit allowed to be set off in accordance with the provisions of section 115JAA 12 [ or section 115JD. ] ] 26 [ Explanation 2. For the purposes of this sub-section, the term dividend shall have the meaning assigned to it in clause (22) of section 2, but shall not include sub-clause (e) thereof. ] (2) The provisions of this section shall apply in respect of assessments for the assessment year commencing on the 1st day of April, 1989 and subsequent assessment years.]] ------------------- Notes :- 1. Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. 2. Substituted for the portion beginning with the words Where in any financial year and ending with the words as the case may be, sixty per cent of the tax due on the returned income: by the Finance Act, 1994, w.e.f. 1-4-1995. Earlier, the quoted portion, as amended by the Finance (No. 2) Act, 1991, w.r.e.f. 1-4-1989 and the Finance Act, 1992, w.e.f. 1-6-1992, read as under : Where in any financial year, the assessee who is liable to pay advance tax under section 208 has failed to pay such tax or the advance tax paid by the assessee on his current income on or before the 15th day of September is less than thirty per cent of the tax due on the returned income or the amount of such advance tax paid on or before the 15th day of December is less than sixty per cent of the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of one and one-half per cent per month of the shortfall for a period of three months on the amount of the shortfall from thirty per cent or, as the case may be, sixty per cent of the tax due on the returned income. 3. Substituted for one and one-fourth by the Taxation Laws (Amendment) Act, 2003, w.e.f. 8-9-2003. Earlier one and one-fourth was substituted for one and one-half by the Finance Act, 2001, w.e.f. 1-6-2001. 4. Substituted for one and one-fourth by the Taxation Laws (Amendment) Act, 2003, w.e.f. 8-9-2003. Earlier one and one-fourth was substituted for one and one-half by the Finance Act, 2001, w.e.f. 1-6-2001. 5. Substituted for one and one-fourth by the Taxation Laws (Amendment) Act, 2003, w.e.f. 8-9-2003. Earlier one and one-fourth was substituted for one and one-half by the Finance Act, 2001, w.e.f. 1-6-2001. 6. Substituted for one and one-fourth by the Taxation Laws (Amendment) Act, 2003, w.e.f. 8-9-2003. Earlier one and one-fourth was substituted for one and one-half by the Finance Act, 2001, w.e.f. 1-6-2001. 7. Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. 8. Substituted for instalment of advance tax which is immediately due or where no such instalment is so due by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997. 9. Second proviso inserted by the Taxation Laws (Amendment) Act, 2000, w.e.f. 4-1-2001. Earlier, the second proviso, as inserted by the Taxation Laws (Amendment) Act, 1991, w.e.f. 15-1-1991 and later on omitted by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997, read as under : Provided further that nothing contained in this sub-section shall apply to any shortfall in the payment of the tax due on the returned income where such shortfall is on account of- (a) restricting the amount of deduction under the third proviso to clause (ii) of sub-section (1) of section 32; (b) increase in the rate of surcharge under section 2 of the Finance Act, 1990 (12 of 1990), as amended by the Taxation Laws (Amendment) Act, 1991, and the assessee has paid the amount of shortfall,- (i) where it is a domestic company and- (1) the case falls under clause (a), as part of the instalment of advance tax which is immediately due; (2) the case falls under clause (b), on or before the 15th day of November, 1990, in respect of the instalment of advance tax due on the 15th day of September, 1990; (ii) where it is not a domestic company and- (1) the case falls under clause (a), as part of the instalment of advance tax which is immediately due; (2) the case falls under clause (b), as part of the instalment of advance tax due on or before the 15th day of March, 1991. 10. Third proviso inserted by the Taxation Laws (Amendment) Act, 2001, w.r.e.f. 3-2-2001. 11. Substituted by the Finance Act, 2006, w.e.f. 1-4-2007. Prior to its substitution, Explanation, as amended by the Taxation Laws (Amendment) Act, 1991, w.e.f. 15-1-1991 and Finance Act, 1992, w.r.e.f. 1-4-1989, read as under : ' Explanation .-In this section, tax due on the returned income means the tax chargeable on the total income declared in the return of income furnished by the assessee for the assessment year commencing on the 1st day of April immediately following the financial year in which the advance tax is paid or payable, as reduced by the amount of tax deductible or collectible at source in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income.' 12. Inserted vide Finance Act, 2012, w.e.f. 01-04-2013. 13. Substituted vide THE FINANCE ACT, 2016 w.e.f. 1st day of June, 2016, before it was read as, ( a ) the company which is liable to pay advance tax under section 208 has failed to pay such tax or- ( i ) the advance tax paid by the company on its current income on or before the 15th day of June is less than fifteen per cent of the tax due on the returned income or the amount of such advance tax paid on or before the 15th day of September is less than forty-five per cent of the tax due on the returned income or the amount of such advance tax paid on or before the 15th day of December is less than seventy-five per cent of the tax due on the returned income, then, the company shallbe liable to pay simple interest at the rate of 3 [one] per cent per month for a period of three months on the amount of the shortfall from fifteen per cent or forty-five per cent or seventy-five per cent, as the case may be, of the tax due on the returned income; ( ii ) the advance tax paid by the company on its current income on or before the 15th day of March is less than the tax due on the returned income, then, the company shall be liable to pay simple interest at the rate of 4 [one] per cent on the amount of the shortfall from the tax due on the returned income: Provided that if the advance tax paid by the company on its current income on or before the 15th day of June or the 15th day of September, is not less than twelve per cent or, as the case may be, thirty-six per cent of the tax due on the returned income, then, it shall not be liable to pay any interest on the amount of the shortfall on those dates; 14. Substituted vide THE FINANCE ACT, 2016 w.e.f. 1st day of June, 2016, before it was read as, the assessee, other than a company, who is liable to pay advance tax under section 208 has failed to pay such tax or,- ( i ) the advance tax paid by the assessee on his current income on or before the 15th day of September is less than thirty per cent of the tax due on the returned income or the amount of such advance tax paid on or before the 15th day of December is less than sixty per cent of the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of 5 [one] per cent per month for a period of three months on the amount of the shortfall from thirty per cent or, as the case may be, sixty per cent of the tax due on the returned income; ( ii ) the advance tax paid by the assessee on his current income on or before the 15th day of March is less than the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of 6 [one] per cent on the amount of the shortfall from the tax due on the returned income : 15.Substituted vide THE FINANCE ACT, 2016 w.e.f. 1st day of June, 2016, before it was read as, section 2, 16.Inserted vide THE FINANCE ACT, 2016 w.e.f. 1st day of June, 2016. 17.Substituted vide THE FINANCE ACT, 2016 w.e.f. 1st day of June, 2016, before it was read as, or clause ( b ) 18.Substituted vide THE FINANCE ACT, 2017 w.e.f. 1st day of April, 2017, before it was read as, an eligible assessee in respect of the eligible business referred to in section 44AD 19. Substituted vide THE FINANCE ACT, 2017 w.e.f. 1st day of April, 2017, before it was read as, an eligible assessee in respect of the eligible business referred to in section 44AD 20. Substituted vide THE FINANCE ACT, 2017 w.e.f. 1st day of April, 2017, before it was read as, first time, 21.Inserted vide THE FINANCE ACT, 2017 w.e.f. 1st day of April, 2017 22. Inserted vide THE FINANCE ACT, 2017 w.e.f. 1st day of April, 2017 23. Inserted vide FINANCE (NO. 2) ACT, 2019 w.e.f. 01-04-2007 24. Substituted vide THE FINANCE ACT, 2021 dated 28-03-2021 w.e.f. 01-04-2021 before it was read as 21 [ (d) income of the nature referred to in sub-section (1) of section 115BBDA ] 25. Numbered vide THE FINANCE ACT, 2021 dated 28-03-2021 w.e.f. 01-04-2021 before it was read as Explanation 26. Inserted vide THE FINANCE ACT, 2021 dated 28-03-2021 w.e.f. 01-04-2021