FinMin notifies corrigendum to I-T Bill on interest for advance tax short-payment
The finance ministry on Tuesday notified a corrigendum to the Income Tax Bill with regard to interest to be charged on short payment of advance tax by a taxpayer.
The corrigendum, which provides for 3 per cent interest on short payment of advance tax, aligns the clause with the existing provisions in the Income Tax Act, 1961.
Taxpayers having a tax liability of Rs 10,000 or more have to pay advance tax in 4 instalments -- June 15, September 15, December 15 and March 15.
Nangia Andersen LLP, Partner, Sandeep Jhunjhunwala said 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," Junjhunwala said.
As per clause 425 of the Income-tax (No. 2) Bill, 2025, passed by the Lok Sabha on Monday, 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 Income Tax Bill, once enacted, will replace the archaic 6-decade-old income tax law. The legislation will make tax law simple by reducing the number of chapters and wordage.
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