Missed advance tax deadline? Salaried person can still avoid interest

Failing to pay advance tax or adjust TDS in time may attract interest under Section 234C for delays and 234B if 90% of the total tax remains unpaid by March 31

The deadline (March 15) for the fourth and final installment of advance tax has passed. If you are a salaried employee who earned additional income during the financial year but missed making the required advance tax payment, you might think that interest under Section 234C is now unavoidable.

 

However, salaried employees who primarily earn income through salary generally have TDS deducted by their employers, which covers their tax liability. But if they have additional income—such as interest, rental, or capital gains—they may be required to pay advance tax to avoid interest penalties under Section 234C.  Calculate Income Tax: Income Tax Calculator Tool

 

 

Even if you missed the March 15 advance tax deadline, you can still prevent Section 234C interest by paying any outstanding tax liability before March 31.

 

Amit Bansal, partner, Singhania & Co. explains how interest can be avoided

 

Compute your total tax liability: Calculate your total tax liability, including salary, interest, rental, capital gains, or any other taxable income.  Read: Old and new tax regimes: How to choose the best option for saving money

 

Check TDS deductions: Verify the TDS already deducted by your employer and banks (check Form 26AS or AIS).

 

Pay any deficit before March 31:  If your total tax liability exceeds Rs 10,000 (after adjusting for TDS), pay the remaining amount as advance tax before March 31 to avoid Section 234C interest.

 

Use online tax payment modes: Pay advance tax through the e-filing portal or designated banks via Challan 280.

 

Missing the March 31 deadline can have consequences

 

If you fail to pay advance tax or arrange for additional TDS deduction by this date, you may incur interest under Section 234C for delaying tax payments. Moreover, Section 234B interest will apply if at least 90 per cent of your total tax liability remains unpaid by March 31. This interest accrues at 1 per cent per month until you file your Income Tax Return (ITR). Therefore, March 31 is your final opportunity to avoid both types of interest penalties.

 

“In case you missed the March 15 deadline, then you must request your employer to deduct additional taxes from your salaries by submitting requisite information,” said SR Patnaik, partner (head - taxation), Cyril Amarchand Mangaldas.