Taxpayers who failed to meet the June 15 advance tax deadline can still settle their liability, but interest will typically apply on the shortfall.
Understanding the consequences of missing the June instalment
- Interest may be charged under Section 234C for the delayed or shortfall instalment, calculated from the original due date until payment.
- Additional interest under Section 234B can be levied if the total advance tax paid falls short of the final tax liability after considering TDS/withholding, with the charge applying on the shortfall from April 1 to the date of payment.
- In practice, the exact applicability depends on your tax liability, category, and regime; penalties beyond interest are not automatic for a missed instalment but could arise under other provisions.
What to do now
- Compute the precise shortfall for the year, including any TDS and refunds.
- Pay the outstanding amount promptly to minimise further interest charges, ideally before the September 15 deadline if you can.
- Review your estimated tax for the remaining year and adjust your instalment estimates to avoid future shortfalls.
Key points to note
- Interest under Sections 234B and 234C applies to defaults in advance tax and to shortfalls in instalments.
- Paying late entails interest; there is typically no waiver of interest simply due to a missed instalment.
Analysis
- With the September 15 deadline approaching, taxpayers who missed June payments should assess their tax position promptly to limit interest costs.
- Accurately estimating annual tax impact and satisfying the outstanding liability can help minimise compounding interest through the remaining instalment dates.
