1. What is Advance Tax Interest?

Advance tax interest under sections 234B and 234C of the Income Tax Act is levied when taxpayers fail to pay their advance tax installments on time or underestimate their tax liability. This interest ensures timely tax payments to the government.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( Assessed Tax \) — The total tax amount assessed (in currency)
• \( Months Delayed \) — Number of months the tax payment was delayed
• \( 1\% \) — Monthly interest rate as per tax regulations

Explanation: The formula calculates simple interest at 1% per month on the delayed tax amount for the number of months delayed.

3. Importance of Interest Calculation

Details: Accurate interest calculation is crucial for taxpayers to understand their total tax liability, avoid penalties, and ensure compliance with tax regulations. It helps in proper financial planning and avoiding unnecessary interest burdens.

4. Using the Calculator

Tips: Enter the assessed tax amount in your local currency and the number of months the payment was delayed. Both values must be positive numbers. The calculator will compute the interest payable under sections 234B/234C.

5. Frequently Asked Questions (FAQ)

Q1: What is the difference between 234B and 234C?
A: Section 234B applies when advance tax paid is less than 90% of the assessed tax, while section 234C applies for deferment of advance tax installments.

Q2: Is the interest rate always 1% per month?
A: Yes, for both sections 234B and 234C, the interest rate is 1% per month or part thereof on the defaulted amount.

Q3: How are months calculated for interest purposes?
A: Months are calculated from the due date of each installment to the date of actual payment or the end of the financial year, whichever is earlier.

Q4: Can this interest be waived?
A: In certain genuine hardship cases, the assessing officer may waive interest under section 234B/234C, but this is subject to specific conditions and approvals.

Q5: Does this calculator account for partial months?
A: Yes, you can enter decimal values for months (e.g., 2.5 months) to calculate interest for partial periods.