Here’s How Late Income Tax Payments Gets Penalized Under Section 234C

Paying income tax within a specific timeframe is very important. In case a taxpayer doesn’t pay tax within the timeframe, then he/she might have to pay the penalty.

Read this article to know more about how late income tax payments can get penalised under Section 234C.

A taxpayer has an entire year to lower his/her tax liability. During this time, he/she can invest in tax-saving investments to save more on taxes. This can make it easier for a taxpayer to file taxes. Furthermore, a taxpayer can use an income tax calculator India to calculate the tax liability. However, there is a specific timeframe within which a taxpayer needs to pay the taxes.

But what happens if a person fails to pay taxes within the timeframe?

Failing to pay taxes within the timeframe can lead to a penalty. Furthermore, the tax officer can penalise the person for the term of 3 months to 2 years and levy a fine if he/she didn’t pay tax within the timeframe. This period can extend up to 7 years in case the tax liability exceeds Rs. 25 Lakhs.

One thing that every taxpayer should keep in mind to avoid penalties is advance tax. Advance tax is payable before the timeframe. Furthermore, this tax is payable on additional income earned from capital gains on house property, shares, etc.

If a person delays paying taxes, then he/she will be levied with penalties under Section 234A, 234B, and 234C.

• Interest Levied Under 234A

A taxpayer might face this penalty if he/she is usually late in filing taxes. The due date for filing returns is 31st July of the assessment year. 

In case a taxpayer makes the payment by the cut-off date, then he/she is liable to pay an interest of 1% on the outstanding taxable amount. This interest is charged over and above the payable tax. The interest is calculated from the due date of filing the return until the date the taxes are filed.

• Interest Levied Under 234B

Under Section 234B, if a person doesn’t pay 90% of the tax payable before the fiscal year ends, then the interest of 1% is applicable. It is applicable if a person hasn’t paid any tax for an assessment year or paid less than 90% of the advance tax due, then the taxpayer will have to pay 1% interest on the tax due.

• Interest Levied Under 234C

Under this section, the penalty is levied if there is a delay in payment of advance tax instalment. If the advance tax paid on or before 15th June is below 15% of the amount, then an interest of 1% per month is levied on the taxpayer. The period of interest is 3 months.

If the advance tax paid on or before 15th September is below 45% of the amount, then an interest of 1% per month is levied on the taxpayer. The period of interest is 3 months. In case the advance tax paid on or before 15th December is below 75% of the amount, then an interest of 1% per month is levied on the taxpayer. The period of interest is 3 months. If the advance tax paid on or before 15th March is below 100% of the amount, then an interest of 1% per month is levied on the taxpayer.