Prepay your FY25 earnings' taxes early to reduce interest expenses later on.
Fresh Take:
Deadline for ITR Filing Extended but Pay That Tax Early
Well, here's a heads-up for all the taxpayers out there! The deadline to file your Income Tax Returns (ITR) for Assessment Year 2025-26 has been extended to September 15, 2025. But here's the catch, folks - don't wait until the due date to pay any due tax to avoid interest charges under Sections 234B and 234C.
You see, if you delay paying the tax, you'll face additional interest charges. The sections are designed to enforce timely payment of taxes to the government. There's no need for last-minute rushes either! File your returns before July 31 to avoid potential technical issues on the e-filing portal, which can get pretty busy closer to the deadline.
Section 234B: Interest for Late Advance Tax Payment
Wondering what happens if you don't pay at least 90% of the total assessed tax as advance tax by March 31 of the financial year? Well, you'll get hit with interest charges under Section 234B. Here's what you should know:
- This interest is simple interest charged at 1% per month or a part of the month on the shortfall amount.
- The tax amount for calculation ignores any fraction below a hundred rupees.
- The interest is calculated from April 1 of the assessment year (the year following the financial year for which tax is computed) until the date on which the tax is actually paid or the return is filed.
- This provision discourages taxpayers from defaulting or underpaying advance tax installments while ensuring the government receives timely tax revenue.
Section 234C: Interest for Delayed or Insufficient Advance Tax Installments
If advance tax installments are either delayed or paid in amounts less than the prescribed percentages by their respective due dates during the financial year, Section 234C interest is levied.
- Interest is charged at 1% per month for three months on the shortfall amount relative to the required installment amount by each due date.
- The income tax law mandates advance tax payments in installments on the following dates (for non-presumptive cases):
- 15th June: at least 15% of the advance tax liability
- 15th September: at least 45% of the advance tax liability (cumulative)
- 15th December: at least 75% of the advance tax liability (cumulative)
- 15th March: 100% of the advance tax liability
- Section 234C encourages taxpayers to pay advance tax in timely installments rather than delaying payments toward the end of the financial year.
Don't Miss the Deadlines
To sum it up, delaying tax payments beyond the due dates in ITR filing attracts penal interest charges under Sections 234B and 234C. Ensure you're paying on time to keep those extra charges at bay!
Taxwise: Stay Informed, Stay Ahead
In the realm of personal-finance, it's crucial to be aware of the deadlines for advance tax payments in the market of finance. For instance, Section 234B incurs simple interest charges at 1% per month if at least 90% of the total assessed tax as advance tax is not paid by March 31 of the financial year. Another crucial aspect is Section 234C, which levies interest for delayed or insufficient advance tax installments throughout the financial year. To avoid these charges, it's essential to stay informed and pay your advance tax in the prescribed installments according to each due date, such as 15th June, 15th September, 15th December, and 15th March.
