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THE INCOME TAX ACT, 2025
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Section 338 - Income not to be inc... Section 339 - Corpus donation... Section 340 - Deemed corpus donati... Section 341 - Application of incom... Section 342 - Accumulated income... Section 343 - Deemed accumulated i... Section 344 - Business undertaking... Section 345 - Restriction on comme... Section 346 - Restriction on comme... Section 347 - Books of account... Section 348 - Audit... Section 349 - Return of income... Section 350 - Permitted modes of i... Section 351 - Specified violation... Section 352 - Tax on accreted inco... Section 353 - Other violations... Section 354 - Application for appr... Section 355 - Interpretation... Section 356 - Appealable orders be... Section 357 - Appealable orders be... Section 358 - Form of appeal and l... Section 359 - Procedure in appeal... Section 360 - Powers of Joint Comm... Section 361 - Appellate Tribunal... Section 362 - Appeals to Appellate... Section 363 - Orders of Appellate ... Section 364 - Procedure of Appella... Section 365 - Appeal to High Court... Section 366 - Case before High Cou... Section 367 - Appeal to Supreme Co... Section 368 - Hearing before Supre... Section 369 - Tax to be paid irres... Section 370 - Execution for costs ... Section 371 - Amendment of assessm... Section 372 - Exclusion of time ta... Section 373 - Filing of appeal by ... ... Section 375 - Procedure when asses... Section 376 - Procedure where an i... Section 377 - Revision of orders p... Section 378 - Revision of other or... Section 379 - Dispute Resolution C... Section 380 - Interpretation... Section 381 - Board for Advance Ru... Section 382 - Vacancies, etc, not ... Section 383 - Application for adva... Section 384 - Procedure on receipt... Section 385 - Appellate authority ... Section 386 - Advance ruling to be... Section 387 - Powers of the Board ... Section 388 - Procedure of Board f... Section 389 - Appeal... Section 390 - Deduction or collect... Section 391 - Direct payment... Section 392 - Salary and accumulat... Section 393 - Tax to be deducted a... Section 394 - Collection of tax at... Section 395 - Certificates... Section 396 - Tax deducted is inco... Section 397 - Compliance and repor... Section 398 - Consequences of fail... Section 399 - Processing... Section 400 - Power of Central Gov... Section 401 - Bar against direct d... Section 402 - Interpretation... Section 403 - Liability for paymen... Section 404 - Conditions of liabil... Section 405 - Computation of advan... Section 406 - Payment of advance t... Section 407 - Payment of advance t... Section 408 - Instalments of advan... Section 409 - When assessee is dee... Section 410 - Credit for advance t... Section 411 - When tax payable and... Section 412 - Penalty payable when... Section 413 - Certificate by Tax R... Section 414 - Tax Recovery Officer... Section 415 - Stay of proceedings ... Section 416 - Other modes of recov... Section 417 - Recovery through Sta... Section 418 - Recovery of tax in p... Section 419 - Recovery of penaltie... Section 420 - Tax clearance certif... Section 421 of Income Tax Act - Re... Section 422 of Income Tax Act - Re... Section 423 of Income Tax Act - In...

Section 424 of Income Tax Act - In...

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Section 424 of Income Tax Act - Interest for defaults in payment of advance tax

424. Interest for defaults in payment of advance tax.

(1) Subject to the other provisions of this section, where, in any tax year, an assessee who is liable to pay advance tax under section 404,–

(a) has failed to pay such tax; or

(b) the advance tax paid by such assessee under the provisions of section 406 or 407 is less than 90% of the assessed tax,

the assessee shall be liable to pay simple interest at the rate of 1% for every month or part of a month, for the period, beginning from the 1st April following such tax year–

(i) upto the date of determination of total income under section 270(1); and

(ii) upto the date of completion of regular assessment, where a regular assessment is made,

on an amount equal to the assessed tax in case where clause (a) is applicable or, on the amount by which the advance tax paid as aforesaid falls short of the assessed tax in case where clause (b) is applicable.

(2) In sub-section (1), “assessed tax” means the tax on the total income determined under section 270(1) and where a regular assessment is made, the tax on the total income determined under such regular assessment as reduced by the amount of,—

(a) any tax deducted or collected at source as per Chapter XIX-B on any income which is subject to such deduction or collection and which is taken into account in computing such total income;

(b) any relief of tax allowed under section 157;

(c) any relief of tax allowed under section 159(1) on account of tax paid in a country outside India;

(d) any relief of tax allowed under section 159(2) on account of tax paid in a specified territory outside India referred to in that section;

(e) any deduction, from the Indian income-tax payable, allowed under section 160, on account of tax paid in a country outside India; and

(f) any tax credit allowed to be set off as per sections 206(1)(m) to (p) and 206(2)(e) to (h).

(3) For the purposes of this section,—

(a) where in relation to a tax year, an assessment is made for the first time under section 279, the assessment so made shall be regarded as a regular assessment;

(b) tax on total income as determined under section 270(1) shall not include the additional income-tax, if any, payable under section 267;

(c) tax on the total income determined under such regular assessment shall not include the additional income-tax payable under section 267.

(4) Where, before the date of determination of total income under section 270(1) or completion of a regular assessment, tax is paid by the assessee under section 266 or otherwise,—

(a) interest shall be calculated as per the foregoing provisions of this section up to the date on which the tax is so paid, and reduced by the interest, if any, paid under section 266 towards the interest chargeable under this section;

(b) thereafter, interest shall be calculated at the rate aforesaid on the amount by which the tax so paid together with the advance tax paid falls short of the assessed tax.

(5) Where as a result of an order of reassessment or recomputation under section 279, the amount on which interest was payable in respect of shortfall in payment of advance tax for any tax year under sub-section (1) is increased, the assessee shall be liable to pay simple interest at the rate of 1% for every month or part of a month comprised in the period commencing on the 1st April immediately following such tax year and ending on the date of the reassessment or recomputationon such amount determined as per formula below:–

A = B-C

where,—

A = the increased amount on which interest was payable in respect of shortfall in payment of advance tax for any tax year as a result of reassessment or recomputation;

B = tax on total income determined on the basis of reassessment or recomputation;

C = tax on total income determined under section 270(1) or regular assessment as referred to in sub-section (1).

(6) Where, as a result of an order under section 287 or 288 or 359 or 363 or 365(10) or 368 or 377 or 378, the amount on which interest was payable under sub-section (1) or (3) has been increased or reduced, the interest shall be increased or reduced accordingly, and—

(a) in a case where the interest is increased, the Assessing Officer shall serve on the assessee a notice of demand in such form as may be prescribed specifying the sum payable and such notice of demand shall be deemed to be a notice under section 289 and the provisions of this Act shall apply accordingly;

(b) in a case where the interest is reduced, the excess interest paid, if any, shall be refunded.

GST Gyaan | https://gstgyaan.in | CA Rajesh Ritolia - 9350171263

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