Income Tax · Glossary
Section 234B Interest
Interest payable when advance tax paid is less than 90% of assessed tax.
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.
Worked example
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. ITR filed 31 July 2027 → 4 months × 1% = Rs. 1,600 interest under 234B.
Practitioner tip
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.
Related Tool
Section 234B/C Interest Calculator →Related glossary terms
- Section 234C Interest — Interest on shortfall in any of the four advance tax instalments.
More in Income Tax
These definitions are educational. Tax laws change annually — verify with a Chartered Accountant before making GST or income-tax decisions.