Chartered Accountant · ICAI M.No. 153926 · FRN 136869W · Reviewed on 7 October 2026
Section 234B: the year-end test
If advance tax paid during the year falls short of 90% of the final liability (after TDS/TCS credit), interest runs at 1% per month or part-month on the shortfall from 1 April of the assessment year until the tax is paid. A ₹1,00,000 shortfall discovered at filing in July costs ₹4,000 — and it keeps running if you delay the self-assessment payment.
Section 234C: the instalment test
Cumulative targets: 15% by 15 June, 45% by 15 September, 75% by 15 December, 100% by 15 March. Each shortfall draws 1% per month for three months (one month for March). Two reliefs matter: the June and September instalments are deemed met at 12% and 36%; and tax on capital gains or windfall income arising mid-year attracts no 234C for earlier instalments if you pay it in the instalments that remain. Taxpayers under 44AD/44ADA pay everything by 15 March in one go.
Avoiding both
The cure is a quarterly tax computation, not a bigger March cheque — by March the 234C meters for June, September and December have already run. We fold this into advance-tax and capital-gains planning, and our income-tax calculator shows the shortfall before it becomes interest. For FY 2025-26 these are sections 234B and 234C of the Income-tax Act, 1961; from Tax Year 2026-27 the same discipline lives in sections 424 and 425 of the Income-tax Act, 2025.