Advance tax and interest
Tax year 2026-27Advance tax interest, with the safe harbour applied
Four instalments, the interest on each shortfall, and the two provisions that spare one: the 12 and 36 percent safe harbour, and relief for income that could not have been estimated.
Your figures
Which Act governs
The Income-tax Act, 2025 is in force from 1 April 2026, so it governs tax year 2026-27. The arithmetic below is the same under either Act. Only the section numbers move.
What to deduct
Tax deducted and collected at source, and nothing else. The threshold and the instalments are worked on that figure, so they are then exactly right. s.425(5) (was 234C) allows a wider set of reductions against the tax that interest runs on, and leaving those out makes the interest here an upper bound rather than an understatement.
Advance tax actually paid, as a running total
How a late payment counts
A payment made after 15 March is still advance tax for the year, so it counts towards the 90 percent test under s.424 (was 234B). It is added to the 15 March running total rather than measured against it. It does not reach the 15 March instalment, which closed on its due date, so s.425(1) (was 234C) still charges the shortfall there.
How to count the months
Interest under s.424 (was 234B) runs from 1 April following the tax year, counting part of a month as a whole month. Count to the date you actually paid the balance as self assessment tax: a return filed and self assessed on 31 July is four months, an audit case settled on 31 October is seven. This page cannot know your dates, so they are yours to set. Where the balance went in parts, or part of it is still outstanding, each slice runs for its own period and this single figure cannot carry that.
Total interest
₹ 4,800
₹ 2,400 under s.425(1) (was 234C) on the instalments, plus ₹ 2,400 under s.424 (was 234B) for 4 months. A further ₹ 1,590 would have been charged but for the safe harbour in s.425(2) (was 234C).
01 / s.408(1) (was 211)
Every instalment, and why it stands
The cumulative percentage each date asks for, what was actually paid against it, and the interest on the difference. Where a row carries nothing, it says which provision spared it.
| Due date | Due | Amount due | Paid by then | Paid this instalment | Shortfall | Relieved | Rate | Interest |
|---|---|---|---|---|---|---|---|---|
| 15 June | 15% | ₹ 72,000 | ₹ 60,000 | ₹ 60,000 | ₹ 12,000 | ₹ 0 | 3% | ₹ 0 |
Nil under s.425(2) (was 234C). ₹ 60,000 paid by 15 June is at or above the ₹ 57,600 the relief asks for, which is 12% of the tax due, and works out at 12.5%. The shortfall of ₹ 12,000 against the 15% instalment carries no interest at all. | ||||||||
| 15 September | 45% | ₹ 2,16,000 | ₹ 1,75,000 | ₹ 1,15,000 | ₹ 41,000 | ₹ 0 | 3% | ₹ 0 |
Nil under s.425(2) (was 234C). ₹ 1,75,000 paid by 15 September is at or above the ₹ 1,72,800 the relief asks for, which is 36% of the tax due, and works out at 36.46%. The shortfall of ₹ 41,000 against the 45% instalment carries no interest at all. | ||||||||
| 15 December | 75% | ₹ 3,60,000 | ₹ 3,00,000 | ₹ 1,25,000 | ₹ 60,000 | ₹ 0 | 3% | ₹ 1,800 |
| 15 March | 100% | ₹ 4,80,000 | ₹ 4,20,000 | ₹ 1,20,000 | ₹ 60,000 | ₹ 0 | 1% | ₹ 600 |
| Interest under s.425(1) (was 234C) | ₹ 2,400 | |||||||
Reading the table
That is the part a reviewer will ask about, so it is on the face of the working rather than in a footnote.
Paid this instalment is derived and not entered: it is each date's running total less the one before. It should read back as your own challans. Where it does not, the boxes above have individual challan amounts in them rather than running totals, and every figure on this page is then worked on a paid column you did not intend.
The amount due column is cumulative, so the shortfall on each row is measured against everything paid up to that date and not against that quarter alone. The three percent on the first three rows is the quarter's charge at one percent a month; the last row runs for a single month, which is why it is one percent.
02 / s.425(2) (was 234C), the safe harbour on the first two instalments
The instalment asks 15 percent. The relief arrives at 12
No interest is charged on the June or September instalment where the advance tax paid on the current income is twelve percent or more by 15 June, or thirty six percent or more by 15 September, of the tax due on the returned income.
Where a working goes wrong
That is s.425(2) (was 234C). The instalments themselves ask for fifteen and forty five. The gap of three and nine percentage points is the relief, and the error to watch for is a working that tests against the instalment: it charges three percent on a shortfall the Act has already forgiven and hands a client a figure that is too high.
Two further points a working has to be honest about. The relief is all or nothing on the row: clear twelve percent and the whole shortfall against fifteen goes uncharged, not merely the difference. And it stops at September. No equivalent reaches the December or March instalments, so a payer who relies on it twice and then drifts is charged in full on the last two rows, which is exactly what the table above shows.
| Instalment | Instalment asks | Relief asks | You paid | Outcome |
|---|---|---|---|---|
| 15 June | ₹ 72,000 | ₹ 57,600 | ₹ 60,000 | Spared |
| 15 September | ₹ 2,16,000 | ₹ 1,72,800 | ₹ 1,75,000 | Spared |
03 / s.425(4) (was 234C), the relief for income that could not be estimated
Income you could not have estimated
A gain that had not arisen, a lottery, a first year of business, a dividend nobody declared yet. Enter the tax attributable to each head, not the income.
The two conditions
s.425(4) (was 234C) takes the shortfall on that income out of the charge on two conditions, and both have to hold. First, the shortfall has to be on account of underestimating or failing to estimate that income. Second, the tax on it has to have been paid in full in a remaining instalment, or by 31 March of the tax year.
This page can only ask you the second one. It assumes the first and cannot test it, because whether the income could have been estimated when the instalment fell due is a question about your client rather than about a figure.
Tax on that income
Clause (i). A gain that had not arisen when the instalment fell due.
Clause (ii). Income of the kind s.2(49)(n) describes, such as winnings.
Clause (iii). Profits and gains accruing or arising for the first time, not a bad year in an existing business.
Clause (iv). Dividend as s.2(40) means it, leaving out sub-clause (e).
Why it starts at Not yet
The relief does not run at all where it was not. Leaving this at the first setting is the honest default: each shortfall is then charged as it stands, apart from any row s.425(2) (was 234C) has already spared.
Interest removed by s.425(4) (was 234C)
₹ 0
Nothing entered against the four heads. ₹ 2,400 of interest is charged as things stand, on 15 December and 15 March. 15 June and 15 September are spared by s.425(2) (was 234C) whatever is entered here. Put the tax on a gain or a dividend in and the rows above move.
A first year of business, read narrowly
Read clause (iii) narrowly. It covers profits and gains of a business or profession accruing or arising for the first time, which is a new source, not a good year in an old one. A trader whose existing business simply did better than the estimate is outside the relief, and the shortfall on it is charged like any other.
04 / s.424 (was 234B)
The ninety percent test, and what it costs to miss it
s.424 (was 234B) is a separate charge from s.425(1) (was 234C), and it is met or missed once for the whole year rather than four times.
When it bites, and for how long
It bites where the assessee failed to pay advance tax at all, or where what was paid is less than ninety percent of the assessed tax. At exactly ninety percent nothing is charged: the Act says less than, and a rupee of margin is a rupee of margin.
Where the test is missed, the charge is one percent for every month or part of a month on the whole shortfall against the assessed tax, not merely on the last ten percent. It runs from 1 April following the tax year, and the period this page charges ends on the date you paid the balance, which is why the months are yours to set rather than ours to guess. The two charges stack: the same underpayment can carry s.425(1) (was 234C) on the instalments and s.424 (was 234B) on the year.
Interest under s.424 (was 234B)
87.5%₹ 2,400
The 90 percent test is failed, so interest runs on the whole shortfall.
₹ 4,20,000 is short of the ₹ 4,32,000 the test asks for, and works out at 87.5% of the assessed tax. Interest then runs on the whole shortfall of ₹ 60,000, not on the margin by which the test was missed. Another ₹ 600 is added for every further month. The working has taken 4 months, counting part of a month as a whole one, so the figure above moves as soon as that does.
05 / One client at a time
The hard part is the estimate
The interest is arithmetic; arriving at the tax on estimated total income, in June, from books that are not closed, is the work. The income tax calculator works out that tax on the estimate.
For a client weighing the presumptive scheme, the presumptive calculator sets it against normal books.
Nothing leaves this page
Every figure is computed in your own browser as you type. The numbers are never sent to us, never stored and never logged. There is no email box in the way of the result, no account, and nothing to unlock. Close the tab and the working is gone.
A client's tax position is confidential. A calculator that keeps it for a mailing list is not one you should be typing it into.
Assumptions and basis
What this calculator applied
- Law applied
- Tax year 2026-27, Income-tax Act, 2025
- Rates checked
- Checked on 17 September 2026
15 notes on how the law was applied
- The Income-tax Act, 2025 is in force from 1 April 2026, so it governs tax year 2026-27. The Act replaces the previous year and the assessment year with a single tax year, which is why no assessment year is named above. FY 2025-26, being filed now, is still under the Income-tax Act, 1961.
- The section numbers carry the 1961 equivalent beside them, from the concordance table in the source below, so a working prepared under the old numbering can be tied to this one line for line.
- This page computes interest on the figures you enter. It does not check the tax itself. The tax on estimated or returned total income is your number, and if it is wrong every line below is wrong with it.
- The Act does not have one base and this page has one deduction line. s.405 (was 209) reduces the advance tax by the tax deductible or collectible at source and by nothing else, and the s.404 (was 208) threshold and the s.408(1) (was 211) instalments are worked on that figure. s.425(5) (was 234C) is wider, allowing six reductions for the purpose of interest: tax deducted at source, tax collected at source, relief under s.157, foreign tax relief under s.159(1) and s.159(2), the s.160 deduction, and tax credits under s.206.
- Enter tax deducted and collected at source on the deduction line, and nothing else. The threshold and the instalments are then exactly right. Where you also have relief under s.157, foreign tax relief, a s.160 deduction or a s.206 credit, the interest shown here is higher than the Act charges, because those four reduce the base interest runs on and have been left out of it. Take the excess off by hand, or read the figure as an upper bound.
- Interest under s.424 (was 234B) runs from 1 April following the tax year, and the months are an input here because no calculator can know your dates. Count them to the date you actually paid the balance under s.266: a return self assessed on 31 July is four months, an audit case settled on 31 October is seven. Part of a month counts as a whole month.
- Where the balance is paid under s.266 before the income is determined, the full rate period stops at the date of that payment and only what is still outstanding runs on from there. That is s.424(4), in the 2025 Act numbering. This page models one payment and one shortfall, which is the whole of the interest where the balance was cleared in one go. Where it was paid in parts, or part of it is still outstanding when the income is determined, each slice runs for its own period, and that second leg is out of scope here and has to be added to what is shown.
- s.424 (was 234B) measures against tax on the income as finally assessed, and s.425(1) (was 234C) against tax on the income as returned. This page takes one figure for both. Where an assessment moves the income the two part company, and the s.424 (was 234B) working has to be redone on the assessed figure.
- s.425(2) (was 234C) reaches the June and September instalments only, and its thresholds of 12 percent and 36 percent sit below the 15 percent and 45 percent the instalments themselves ask for. Nothing similar reaches December or March.
- s.425(4) (was 234C) has two limbs and both must be satisfied. The shortfall must be on account of underestimating or failing to estimate capital gains, casual income within s.2(49)(n), income of a business or profession accruing for the first time, or dividend. AND the tax on that income must have been paid in full in a remaining instalment, or by 31 March of the tax year.
- Only the second limb is a question about a payment, so only the second is asked here. Switching the relief on asserts the first for you: that the income could not have been estimated when the instalment fell due. That is a judgement about your client's affairs and this page cannot make it. A trader whose existing business simply beat the estimate does not satisfy it and is charged in full. Leave the switch off where either limb fails, because the relief then does not run at all.
- s.408(2) (was 211) puts the whole of the advance tax on 15 March for an assessee declaring under s.58(2), Sl. No. 1 or 3 (was 44AD and 44ADA), and for nobody else. A goods carriage business declaring under the plying, hiring or leasing scheme, s.44AE as it was and Sl. No. 2 of the s.58(2) Table as it now is, is outside it. They pay the ordinary four instalments and are charged under s.425(1) (was 234C) on each shortfall. Choose the ordinary assessee above for them, however presumptive the income.
- Interest here is computed on the exact rupee shortfall. Where a different rounding convention is applied to the amount interest runs on, the figure will move by a few rupees.
- The rates and thresholds applied are those the Act carries as enacted. No Finance Act has been read for any rate, which does not affect this page: it applies no slab, no surcharge and no cess, and starts from the tax figure you supply.
- Nothing here is a return, a challan or advice. It is a working you can tick against your own.
This is a working estimate, not advice, and it will not cover every case. Rates and thresholds change. Check the figure against the law as it stands before you rely on it or sign anything. All calculators