Income Tax · Glossary
Section 234C Interest
Interest on shortfall in any of the four advance tax instalments.
Section 234C of the Income Tax Act, 1961 charges 1% per month for 3 months on shortfall in each advance tax instalment. The instalments and minimum cumulative percentages: 15% by 15 June, 45% by 15 September, 75% by 15 December, 100% by 15 March.
Unlike 234B (overall shortfall), 234C tracks instalment-level shortfalls. Taxpayers under presumptive taxation (44AD/44ADA) are exempt from the first three instalments under the proviso to Section 234C(1) — they only need to pay 100% by 15 March.
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.
Practitioner tip
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.
Related Tool
Section 234B/C Interest Calculator →Related glossary terms
- Section 234B Interest — Interest payable when advance tax paid is less than 90% of assessed tax.
More in Income Tax
These definitions are educational. Tax laws change annually — verify with a Chartered Accountant before making GST or income-tax decisions.