Interest payable for non payment of Advance tax (Section 234B) – myITreturn Help Center

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FY 2025-26 / AY 2026-27: Section 234B, Income-tax Act, 1961
Tax year 2026-27: Corresponding section 424, Income-tax Act, 2025

Section 234B charges interest when a taxpayer who was liable to pay advance tax either did not pay it or paid less than 90% of the assessed tax by the end of the financial year.

When Does Section 234B Apply?

Interest generally applies when:

Advance-tax liability for the year is ₹10,000 or more; and
No advance tax was paid, or advance tax paid is less than 90% of assessed tax.

A resident individual aged 60 years or more who does not have income from business or profession is generally not liable to pay advance tax.

Assessed tax: For this purpose, tax on total income is reduced by eligible TDS, TCS, relief and specified tax credits. The exact computation should be taken from the return and applicable law.

Rate and Period

Interest is simple interest at 1% per month or part of a month. It generally runs from 1 April following the financial year until the date specified by law, including the date of determination or regular assessment. Where self-assessment tax is paid before filing, the computation reflects the payment date and any partial payments.

Basic Formula

Section 234B interest = Shortfall in assessed tax × 1% × Number of months or part-months

Example

Assume for FY 2025-26:

Assessed tax: ₹1,00,000
Advance tax paid: ₹70,000
Balance paid on 20 July 2026

Advance tax is only 70% of assessed tax, so section 234B applies. The shortfall is ₹30,000. April to July counts as four months because part of July is treated as a full month.

Interest: ₹30,000 × 1% × 4 = ₹1,200

If advance tax had been at least ₹90,000, section 234B would ordinarily not apply, although section 234C may still apply for delayed instalments.

Section 234B vs Section 234C

Section 234B	Section 234C
Checks the overall advance-tax shortfall at year-end.	Checks whether required advance-tax instalments were paid on time during the year.
Usually begins from 1 April after the financial year.	Applies separately to specified instalment dates.

How to Pay the Shortfall

Log in to the Income-tax e-Filing portal.
Open e-Pay Tax and start a new payment.
Select Income Tax and the correct year.
For AY 2026-27, select the applicable self-assessment-tax payment option.
Enter tax, interest and fee amounts according to the computation.
Pay and retain the challan details for reporting in the ITR.

Select the correct law and year. A shortfall relating to FY 2025-26 and AY 2026-27 remains governed by the Income-tax Act, 1961 even if the interest is paid after 1 April 2026.

Income-tax Act, 2025 Transition

For income earned in tax year 2026-27 beginning 1 April 2026, section 424 of the Income-tax Act, 2025 corresponds to section 234B. The ₹10,000 advance-tax threshold, 90% test and 1% monthly interest framework continue without a policy change.

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