02 August 2025
Sure! Here’s a clear explanation of **Sections 234A, 234B, and 234C** of the Income Tax Act, 1961 — their purpose and how penalties/interest under these sections are calculated:
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### **Section 234A: Interest for Delay in Filing Return of Income**
* **When applicable?** If you **fail to file your income tax return** within the due date prescribed under **Section 139(1)** (usually 31st July for individuals), **interest under 234A is levied**.
* **Purpose:** Penalize taxpayers who delay filing the income tax return beyond the due date.
* **How interest is calculated?**
* Interest is charged @ **1% per month or part of a month** of delay. * Interest is calculated on the **amount of tax unpaid** on the due date. * The period is counted from the **day after the due date of filing return** till the actual date of filing the return.
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### **Section 234B: Interest for Default in Payment of Advance Tax**
* **When applicable?** If you have **not paid advance tax or paid less than 90%** of your total tax liability by the due date, interest under 234B is levied.
* **Purpose:** To encourage taxpayers to pay advance tax on time and avoid deferring tax payments till the due date.
* **How interest is calculated?**
* Interest @ **1% per month or part of month** is charged on the **amount of shortfall in advance tax**. * Period is counted from **1st April of the assessment year till the date of payment of tax or assessment, whichever is earlier**.
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### **Section 234C: Interest for Deferment of Advance Tax**
* **When applicable?** If you **delay or defer payment of installment(s) of advance tax**, interest under 234C applies.
* **Purpose:** Penalize taxpayers who delay payment of installment-wise advance tax beyond specified due dates.
* **Advance Tax Installment Due Dates:**
* 15th June — 15% of advance tax * 15th September — 45% of advance tax (cumulative) * 15th December — 75% of advance tax (cumulative) * 15th March — 100% of advance tax
* **How interest is calculated?**
* Interest @ **1% per month or part of month** on the **amount of shortfall** in installment paid. * Period is for **3 months** for first 3 installments (June, Sept, Dec) and **1 month** for the last installment (March).
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### **Summary Table:**
| Section | Purpose | Interest Rate | Period for Calculation | Tax Base | | ------- | ------------------------------------- | ------------- | --------------------------------------------- | ------------------------ | | 234A | Delay in filing return | 1% per month | From due date of filing to actual filing date | Tax unpaid on due date | | 234B | Default in payment of advance tax | 1% per month | From 1st April till payment/assessment | Shortfall in advance tax | | 234C | Deferment of advance tax installments | 1% per month | For 3 months or 1 month as per installment | Shortfall in installment |
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If you want, I can provide a formula or example for calculation of interest under each section for better clarity. Would you like that?
CAclubindia
