New I-T Bill: Finance Ministry clarifies interest on advance tax shortfall — check revision here
This corrigendum provides for 3 per cent interest on short payment of advance tax, and aligns the new Bill's clause with the existing provisions in the Income Tax Act, 1961.
Taxpayers having a tax liability of ₹ 10,000 or more have to pay advance tax in four instalments — June 15, September 15, December 15 and March 15.
Sandeep Jhunjhunwala, Partner at Nangia Andersen LLP told PTI that as per the corrigendum to Clause 425 of the Income-tax (No 2) Bill, 2025, the interest provision for shortfall in advance tax payment has now been aligned with that under the Income-tax Act, 1961.
'If there is a shortfall in remittance of advance tax even for a day beyond the statutory quarterly due date, interest is charged for a minimum of 3 months,' he stated. As per clause 425 of the Income-tax (No. 2) Bill, 2025, passed by the Lok Sabha on August 11, if the advance tax shortfall is made good by the next day of the quarterly due date, interest would be charged for one month at 1 per cent.
The provision was not in alignment with the current tax laws, Jhunjhunwala said, adding that 'this ambiguity has now been restored and aligned with the existing provisions itself'.
The Lok Sabha on August 11, passed the modified new Income Tax Bill, 2025 and the Taxation Laws (Amendment) Bill, 2025, shortly after Finance Minister Nirmala Sitharaman tabled the revised version in Parliament.
Now, the Bill must be passed by the Rajya Sabha to replace the current Act, and then it will seek the President's nod. Once enacted, the new I-T Bill will replace the archaic six-decade-old income tax law. The legislation will make tax law simple by reducing the number of chapters and wordage.
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