Section 234C:
Interest for deferment of advance tax.
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(1) Where in any financial year,—
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(a) an assessee, other than 3
the assessee referred to in clause (b), who is liable to pay advance
tax under section 208 has failed to pay such tax or—
(i) the advance tax paid by such assessee on its current income on or before the 15th day of
June is less than fifteen per cent. of the tax due on the returned income or the amount of such
advance tax paid on or before the 15th day of September is less than forty-five per cent. of the tax
due on the returned income or the amount of such advance tax paid on or before the 15th day of
December is less than seventy-five per cent. of the tax due on the returned income, then, the
assessee shall be liable to pay simple interest at the rate of one per cent. per month for a period of
three months on the amount of the shortfall from fifteen per cent or forty-five per cent. or
seventy-five per cent., as the case may be, of the tax due on the returned income;
(ii) the advance tax paid by the assessee on the current income on or before the 15th day of
March is less than the tax due on the returned income, then, the assessee shall be liable to pay
simple interest at the rate of one per cent. on the amount of the shortfall from the tax due on the
returned income:
Provided that if the advance tax paid by the assessee on the current income, on or before the
15th day of June or the 15th day of September, is not less than twelve per cent or, as the case may
be, thirty-six per cent. of the tax due on the returned income, then, the assessee shall not be liable
to pay any interest on the amount of the shortfall on those dates;
(b) 45
an assessee who declares profits and gains in accordance with the provisions of
sub-section (1) of section 44AD or sub-section (1) of section 44ADA, as the case may be, who is
liable to pay advance tax under section 208 has failed to pay such tax or the advance tax paid by the
assessee on its current income on or before the 15th day of March is less than the tax due on the
returned income, then, the assessee shall be liable to pay simple interest at the rate of one per cent on
the amount of the shortfall from the tax due on the returned income:
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Provided that nothing contained in this sub-section shall apply to any shortfall in the payment of the
tax due on the returned income where such shortfall is on account of under-estimate or failure to
estimate—
(a) the amount of capital gains; or
(b) income of the nature referred to in sub-clause (ix) of clause (24) of 7
section 2; or
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(c) income under the head “Profits and gains of business or profession” in cases where the
income accrues or arises under the said head for the 9
first time; or
10(d) income of the nature referred to in sub-section (1) of section 115BBDA,
and the assessee has paid the whole of the amount of tax payable in respect of income referred to in
clause (a) 11
or clause (b) or clause (c) 12
or clause (d), as the case may be, had such income been a part of
the total income, as part of the 13
remaining instalments of advance tax which are due or where no such
instalments are due, by the 31st day of March of the financial year:
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Provided further that nothing contained in this sub-section shall apply to any shortfall in the
payment of the tax due on the returned income where such shortfall is on account of increase in the rate of
surcharge under section 2 of the Finance Act, 2000 (10 of 2000), as amended by the Taxation Laws
(Amendment) Act, 2000 (1 of 2001), and the assessee has paid the amount of shortfall, on or before the
15th day of March, 2001 in respect of the instalment of advance tax due on the 15th day of June, 2000,
the 15th day of September, 2000 and the 15th day of December, 2000:
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Provided also that nothing contained in this sub-section shall apply to any shortfall in the payment
of the tax due on the returned income where such shortfall is on account of increase in the rate of
surcharge under section 2 of the Finance Act, 2000 (10 of 2000) as amended by the Taxation Laws
(Amendment) Act, 2001 (4 of 2001) and the assessee has paid the amount of shortfall on or before the
15th day of March, 2001 in respect of the instalment of advance tax due on the 15th day of June, 2000,
the 15th day of September, 2000 and 15th day of December, 2000.
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Explanation.—In this section, “tax due on the returned income” means the tax chargeable on the
total income declared in the return of income furnished by the assessee for the assessment year
commencing on the 1st day of April immediately following the financial year in which the advance tax is
paid or payable, as reduced by the amount of,—
(i) any tax deductible or collectible at source in accordance with the provisions of Chapter XVII
on any income which is subject to such deduction or collection and which is taken into account in
computing such total income;
(ii) any relief of tax allowed under section 90 on account of tax paid in a country outside India;
(iii) any relief of tax allowed under section 90A on account of tax paid in a specified territory
outside India referred to in that section;
(iv) any deduction, from the Indian income-tax payable, allowed under section 91, on account of
tax paid in a country outside India; and
(v) any tax credit allowed to be set off in accordance with the provisions of section
115JAA 17
or section 115JD.
(2) The provisions of this section shall apply in respect of assessments for the assessment year
commencing on the 1st day of April, 1989 and subsequent assessment years.
Notes:
1. Subs. by Act 32 of 1994, s. 45, for certain words (w.e.f. 1-4-1995).
2. Subs. by Act 28 of 2016, s. 91, for clause (a) (w.e.f. 1-6-2016).
3. Subs. by Act 7 of 2017, s. 75, for “an eligible assessee in respect of the eligible business referred to in section 44AD”
(w.e.f. 1-4-2017).
4. Subs. by Act 28 of 2016, s. 91, for certain words (w.e.f. 1-6-2016).
5. Subs. by Act 7 of 2017, s. 75, for “an eligible assessee in respect of the eligible business referred to in section 44AD”
(w.e.f. 1-4-2017).
6. Ins. by Act 3 of 1989, s. 40 (w.e.f. 1-4-1989).
7. Subs. by Act 28 of 2016, s. 91, for “section 2” (w.e.f. 1-6-2016).
8. Ins. by s. 91, ibid. (w.e.f. 1-6-2016).
9. Subs. by Act 7 of 2017, s. 75, for “first time,” (w.e.f. 1-4-2017).
10. Ins. by s. 75, ibid (w.e.f. 1-4-2017).
11. Subs. by Act 28 of 2016, s. 91, for “or clause (b)” (w.e.f. 1-6-2016).
12. Ins. by Act 7 of 2017, s. 75 (w.e.f. 1-4-2017).
13. Subs. by Act 33 of 1996, s. 54, for “instalment of advance tax which is immediately due or where no such instalment is so
due” (w.e.f. 1-4-1997).
14. Ins. by Act 1 of 2001, s. 4 (w.e.f. 4-1-2001).
15. Ins. by Act 4 of 2001, s. 7 (w.e.f 3-2-2001).
16. Subs. by Act 21 of 2006, s. 50, for the Explanation (w.e.f. 1-4-2007).
17. Ins. by Act 23 of 2012, s. 87 (w.e.f. 1-4-2013).