Late Fee and InterestAdvance tax interest on a shortfall of ₹2,50,000
If you did not pay ₹2,50,000 of the tax you owed in advance, section 424 of the Income-tax Act, 2025 charges simple interest of 1% for every month or part of a month from the 1st April after the tax year, which is ₹2,500 a month.
By months from 1 April
| Months | Interest |
|---|---|
| 1 | ₹2,500 |
| 2 | ₹5,000 |
| 3 | ₹7,500 |
| 4 | ₹10,000 |
| 6 | ₹15,000 |
| 8 | ₹20,000 |
| 10 | ₹25,000 |
| 12 | ₹30,000 |
| 18 | ₹45,000 |
| 24 | ₹60,000 |
What this tells you
- A part of a month counts as a full month, so paying on 2 July after the tax year counts 4 months from 1 April.
- Paying the tax as soon as you know the figure, even before filing the return, stops the interest on that amount.
- This is separate from interest for filing late (section 423) and from interest for paying advance tax late in instalments (section 425).
Common questions
How much interest on a ₹2,50,000 shortfall?
₹2,500 a month (1%), so ₹15,000 if paid after 6 months and ₹30,000 after 12.
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.