Late Fee and InterestInterest for not paying advance tax
Section 424 of the Income-tax Act, 2025 charges simple interest of 1% for every month or part of a month on the tax not paid in advance, counted from 1 April after the tax year until you pay. Enter the shortfall and the date you paid.
Interest on a shortfall
The rule
An assessee liable to pay advance tax under section 404 who has paid none, or less than 90% of the assessed tax, pays simple interest at 1% for every month or part of a month from the 1st April after the tax year, on the assessed tax if nothing was paid or on the shortfall otherwise (section 424(1)). It runs up to the date the total income is determined under section 270(1) or the regular assessment is completed; tax paid in between, for example as self-assessment tax, stops the interest on the amount paid (section 424(4)).
Common questions
When is interest charged for advance tax?
Under section 424, if a person liable to pay advance tax has not paid it, or the advance tax paid is less than 90% of the assessed tax, simple interest of 1% for every month or part of a month is charged from the 1st April following the tax year, on the shortfall.
What is the 90% rule?
If the advance tax paid is at least 90% of the assessed tax there is no interest under this section for the shortfall; if it is less, interest is charged on the amount by which it falls short of the assessed tax.
What is the assessed tax?
The tax on the total income as determined, reduced by tax deducted or collected at source and certain reliefs (section 424(2)).
Sources
- The Income-tax Act, 2025 (Act No. 30 of 2025), as published in the Gazette of India, Extraordinary (egazette.gov.in), read from the PDF on 13 November 2026. Sections used: 263(1)(c) (due dates), 398(3)(a) (late TDS and TCS interest), 423 (late return interest), 424 (advance tax default), 425 (advance tax deferment), 426 (excess refund), 427 (late statement fee), 428 (late return fee).
- Commencement and the repeal of the 1961 Act: section 1(3) (in force on 1 April 2026) and section 536 of the same Act, and the CBDT's "FAQs on Interplay and Transition to the Income-tax Act, 2025" (incometaxindia.gov.in), questions 1.12, 3.5 and 6.1, read on 13 November 2026.
- Counting months: sections 398(3)(a) and 424 say "every month or part of a month", and the CBDT's FAQs (Q on interest for defaults in deducting or depositing TDS and for advance tax, read 13 November 2026) say "per month or part thereof". The Act itself leaves "the rounding off of periods when a fraction of a month is involved" to the rules it empowers the Government to make (the list of rule-making powers, clause (u)); those Income-tax Rules were not read. This site therefore counts every started month, measured from the starting date (28 June to 2 July is one month; 10 January to 12 February is two), which matches "month or part thereof" but the rules may fix the starting-date convention differently. Section 423 itself says only "number of months comprised in the period", so its calculator also shows the whole-month count.
Rates and fees read on 13 November 2026 from the Income-tax Act, 2025 as published in the Gazette. Rules can be amended, and the portal or your assessing officer computes the final amount. This site does the arithmetic and is not tax advice; it is not connected with the Income Tax Department.