Quick Answer: Interest under Section 234A for late ITR filing is 1% per month (or part thereof) on the unpaid tax amount, from the due date (31 July for non-audit cases) to the actual filing date. This is in addition to Section 234B (advance tax shortfall) and 234C (advance tax instalment shortfall) interest, both also at 1% per month.
Section 234A, 234B, 234C — A Complete Guide
Sections 234A, 234B, and 234C of the Income Tax Act impose interest penalties on taxpayers who file their returns late, pay insufficient advance tax, or defer advance tax instalments. These interest charges are in addition to any late filing fee under Section 234F.
Interest Rates and Applicability
| Section | Trigger | Interest Rate | Period |
|---|---|---|---|
| 234A | ITR filed after due date | 1% per month | From due date to actual filing |
| 234B | Advance tax < 90% of tax liability | 1% per month | From April 1 to assessment date |
| 234C | Instalment shortfall | 1% per month | 3 months per instalment (1 month for last) |
Frequently Asked Questions
234A is avoided by filing ITR on time. 234B is avoided by ensuring total advance tax + TDS ≥ 90% of tax liability. 234C is avoided by paying correct instalments on time. Most salaried employees avoid these if their employer deducts sufficient TDS throughout the year.
Section 234F is a flat fee (not interest): ₹1,000 if income ≤ ₹5 lakh, ₹5,000 if income > ₹5 lakh. After December 31, the fee increases to ₹10,000. This is separate from and in addition to Section 234A interest.