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Income Tax · Glossary

Section 234B Interest

Interest payable when advance tax paid is less than 90% of assessed tax.

Updated 2026-10-08Source: Income-tax Act · CGST Act · CBDT/CBIC

What it means

Section 234B of the Income Tax Act, 1961 charges 1% per month (or part thereof) interest on the shortfall when your total advance tax paid is less than 90% of your final assessed tax. Calculated from 1 April of the assessment year until the date of regular tax payment.

The Section 234B interest is independent of Section 234C interest — both can apply simultaneously if you both underpaid advance tax overall and missed quarterly instalments.

From tax year 2026-27 the same charge is s.424 of the Income-tax Act 2025, running from 1 April after the tax year.

A worked example

FY 2025-26: final assessed tax Rs. 1,20,000; advance tax paid Rs. 80,000 (under the 90% threshold of Rs. 1,08,000). Shortfall = Rs. 40,000, paid as self-assessment tax on 31 August 2026 with the return → 5 months (April–August) × 1% = Rs. 2,000 interest under 234B. For tax year 2026-27 the same charge falls under s.424.

Even Rs. 1 below the 90% mark triggers full 234B on the entire shortfall — pay slightly above 90% on your March instalment if there is any uncertainty about your year-end income.

Run it on your own numbersSection 234B/C Interest Calculator — no signup.

Look up the details

Income-tax entries cite the Income-tax Act 1961, which governs FY 2025–26 (the return filed in 2026); from tax year 2026–27 the Income-tax Act 2025 applies, with new section numbers shown where we give them. GST law is unchanged. General information, not tax advice; verify with your CA before you file.

Related terms

Income Tax

Section 234C Interest

Interest on shortfall in any of the four advance tax instalments.

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