Advance Taxes are an important contribution by all taxpayers as the taxes collected will be used by the government as per their budget promises. Most importantly, timely payment of advance taxes helps the tax filers to reduce their interest for delayed payment of taxes. Interest under Section 234 B & 234 C of Income Tax Act, 1961.
Advance Tax due dates for Financial year 2023-24 (Assessment year 2024-25)
|Advance Tax Due dates
|Taxes to be paid
|15th June 2023
|15% of tax liability
|15th September 2023
|45% of tax liability
|15th December 2023
|75% of tax liability
|15th March 2024
|100% of tax liability
Under section 234B, interest for default in payment of advance tax is levied at 1% per month or part of a month. The taxpayer is liable to pay simple interest at 1% per month or part of a month for default in payment of advance tax.
Interest under section 234C is levied for a period of 3 months, in case of shortfall in payment of 1st, 2nd and 3rd installment and for 1 month, in case of shortfall in payment of last installment. Interest under Section 234C is levied on the short paid amount of installment(s) of advance tax.
Smart CFO financial planning: Interest levied by banks nowadays is around 8 to 10 % per annum for most of the MSME’s. However interest charged by the tax department for delay in advance tax is 12 % per annum. Hence, pay taxes from your working capital limits and relax! Good arbitrage exercise for your business and most important no notices from the tax department for this!