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Income Tax · Glossary

Section 234C Interest

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

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

What it means

Section 234C of the Income Tax Act, 1961 charges 1% per month for 3 months (a flat 3%) on the shortfall in each of the June, September and December advance tax instalments, and 1% on the March shortfall. It is a fixed charge, not interest that keeps running: paying a missed instalment a few days late costs the same as paying it at the next deadline, though paying early still shrinks the shortfall counted at the next instalment. The instalments and minimum cumulative percentages: 15% by 15 June, 45% by 15 September, 75% by 15 December, 100% by 15 March. No interest is charged on the first two if you have paid at least 12% by 15 June and 36% by 15 September.

Unlike 234B (overall shortfall), 234C tracks instalment-level shortfalls. Taxpayers who declare presumptive income (44AD/44ADA) owe a single instalment of 100% by 15 March (Section 211(1)(b)), so 234C(1)(b) charges them only 1% on any March shortfall.

From tax year 2026-27 the same charge is s.425 of the Income-tax Act 2025, and the single presumptive instalment is s.408(2).

A worked example

Non-presumptive taxpayer with Rs. 1,00,000 final tax. Missed the 15 Sep instalment (should have paid Rs. 45,000, actually paid Rs. 20,000) → Rs. 25,000 × 1% × 3 months = Rs. 750 interest just for that miss.

If you are eligible for 44ADA, formally claim it at filing — even if you pay quarterly out of habit, the 234C protection from instalment-level interest only applies if your ITR reports presumptive 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 234B Interest

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

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