Taxpayers who missed the final instalment deadline on 15 March still have options to limit the financial impact. While the Income Tax Act requires individuals to pay their tax liability in scheduled instalments during the financial year, missing the deadline does not close the window entirely.
However, it is important to note that delays can attract interest under Sections 234B and 234C of the Income Tax Act. Therefore, taxpayers are advised to clear their dues on time to avoid additional interest and other complications.
Advance tax must be paid by all individuals and entities whose net tax liability remains even after accounting for tax deducted at source (TDS), tax collected at source (TCS), and tax credits. If the outstanding amount is ₹10,000 or more, paying it becomes mandatory.
What should a taxpayer do now?
If you missed the deadline for payment of advance tax, you can still make the payment on or before 31 March and have the payment counted as advance tax, said CA Niresh Maheshwari, the Director of Wealth Wisdom, further warning that the grace period, however, carries a cost.
“Most taxpayers view 15 March as just another deadline to submit the fourth and final advance tax instalment, but failure to meet that deadline can have significant financial repercussions,” he said.
Taxpayers are advised to keep a track of all income sources and possible deductions to calculate their advance tax correctly. In case you have rental income, interest income, or , inform your employer so that adequate TDS is deducted from your salary.
Once everything is in place, you can make the payment on Income Tax Department’s online platform. Payments can be made using net banking, UPI, debit cards, and credit cards.
How much interest you will be charged for late payment?
Advance tax is normally payable in four instalments throughout the financial year— 15% by 15 June, 45% by 15 September, 75% by 15 December, and 100% by 15 March.
There are two cases under which interests will be charged if you fail to make the stipulated payment on time:
Section 234C: If advance tax is not paid according to the prescribed quarterly deadlines, interest under Section 234C is levied at 1% per month on the shortfall amount. “Even a delay of a few days attracts 1% interest for one month on the unpaid amount, because any fraction of a month is treated as a full month for tax computation,” Maheshwari said.
Section 234B: If the taxpayer fails to pay at least 90% of their total tax liability by 31 March, interest under Section 234B comes into effect. In such cases, simple interest is charged at 1% per month on the unpaid amount, starting from 1 April and continuing until the payment is made.
“Most taxpayers cannot have the interest under these provisions waived pursuant to guidelines, and consequently, the amount of interest will be automatically calculated during your income tax return preparation,” he noted.
Who should pay advance tax?
It is mandatory for some individuals to pay , including:
— Freelancers and consultants.
— Individuals receiving rental income from property.
— People who earned capital gains from stocks, mutual funds or other assets in the quarter in which the sale occurred.
— Taxpayers who received interest income from fixed deposits or other sources.
— Salaried individuals who have additional income that is not fully covered by TDS, such as profits from the sale of stocks, cryptocurrency gains, and rental income.
Disclaimer: This story is for educational purposes only. We advise taxpayers to consult with certified experts before making any tax-related decisions.