Section 234B of Income Tax Act "Interest for defaults in payment of advance tax"
234B. (1) Subject to the other provisions of this section, where, in any financial year, an assessee who is liable to pay advance tax under section 208 has failed to pay such tax or, where the advance tax paid by such assessee under the provisions of section 210 is less than ninety per cent of the assessed tax, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or part of a month comprised in the period from the 1st day of April next following such financial year to the date of determination of total income under sub-section (1) of section 143 and where a regular assessment is made, to the date of such regular assessment, on an amount equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid as aforesaid falls short of the assessed tax.
Explanation 1.-In this section, "assessed tax" means the
tax on the total income determined under sub-section (1) of
section 143 and where a regular assessment is made, the tax
on the total income determined under such regular assessment
as reduced by the amount of,-
(i) any tax deducted or collected 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;
99[(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 or section 115JD.
Explanation 2.-Where, in relation to an assessment year, an
assessment is made for the first time under section 147 or
section 153A, the assessment so made shall be regarded as a
regular assessment for the purposes of this section.
Explanation 3.-In Explanation 1 and in sub-section (3) "tax
on the total income determined under sub-section (1) of
section 143" shall not include the additional income-tax, if
any, payable under section 143.
(2) Where, before the date of determination of total income
under sub-section (1) of section 143 or completion of a
regular assessment, tax is paid by the assessee under
section 140A or otherwise,-
(i) interest shall be calculated in accordance with the
foregoing provisions of this section up to the date on which
the tax is so paid, and reduced by the interest, if any,
paid under section 140A towards the interest chargeable
under this section;
(ii) thereafter, interest shall be calculated at the rate
aforesaid on the amount by which the tax so paid together
with the advance tax paid falls short of the assessed tax.
(2A) (a) where an application under sub-section (1) of
section 245C for any assessment year has been made, the
assessee shall be liable to pay simple interest at the rate
of one per cent for every month or part of a month comprised
in the period commencing on the 1st day of April of such
assessment year and ending on the date of making such
application, on the additional amount of income-tax referred
to in that sub-section;
(b) where as a result of an order of the Settlement
Commission under sub-section (4) of section 245D for any
assessment year, the amount of total income disclosed in the
application under sub-section (1) of section 245C is
increased, the assessee shall be liable to pay simple
interest at the rate of one per cent for every month or part
of a month comprised in the period commencing on the 1st day
of April of such assessment year and ending on the date of
such order, on the amount by which the tax on the total
income determined on the basis of such order exceeds the tax
on the total income disclosed in the application filed under
sub-section (1) of section 245C;
(c) where, as a result of an order under sub-section (6B) of
section 245D, the amount on which interest was payable under
clause (b) has been increased or reduced, as the case may
be, the interest shall be increased or reduced accordingly;
(3) where, as a result of an order of reassessment or
recomputation under section 147 or section 153A, the amount
on which interest was payable in respect of shortfall in
payment of advance tax for any financial year under
sub-section (1) is increased, the assessee shall be liable
to pay simple interest at the rate of one per cent for every
month or part of a month comprised in the period commencing
on the 1st day of April next following such financial year
and ending on the date of the reassessment or recomputation
under section 147 or section 153A, on the amount by which
the tax on the total income determined on the basis of the
reassessment or recomputation exceeds the tax on the total
income determined under sub-section (1) of section 143 or on
the basis of the regular assessment as referred to in
sub-section (1), as the case may be;
(4) where, as a result of an order under section 154 or
section 155 or section 250 or section 254 or section 260 or
section 262 or section 263 or section 264, the amount on
which interest was payable under sub-section (1) or
sub-section (3) has been increased or reduced, as the case
may be, the interest shall be increased or reduced
accordingly, and-
(i) in a case where the interest is increased, the Assessing
Officer shall serve on the assessee a notice of demand in
the prescribed form specifying the sum payable and such
notice of demand shall be deemed to be a notice under
section 156 and the provisions of this Act shall apply
accordingly;
(ii) in a case where the interest is reduced, the excess
interest paid, if any, shall be refunded;
(5) 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.
234C. (1) Where in any financial year,-
(a) an assessee, other than 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) 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:
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 section 2; or
(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 first time; or
(d) income of the nature referred to in sub-section (1) of
section 115BBDA,
and the assessee has paid the whole of the amount of tax
payable in respect of income referred to in clause (a) or
clause (b) or clause (c) or clause (d), as the case may be,
had such income been a part of the total income, as part of
the 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:
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 :
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.
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,-
(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;
1[(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 or section 115JD.
(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.