The Statutory Brief

IT Act 1961 → 2025 / Section 234B

Interest

Section 234B → Section 424

Interest for default in payment of advance tax

Section 234B of the old Income-tax Act, 1961 · new section 424 under the Income-tax Act, 2025

New reference Section 424

Income-tax Act, 1961Section 234B

  • Applies where advance tax paid is less than 90% of assessed tax
  • 1% per month from 1 April after the financial year
  • Does not apply where no advance-tax liability exists

Applies to FY 2025-26 (AY 2026-27) and earlier years.

Income-tax Act, 2025Section 424

  • Same charge, now section 424
  • 90% test and 1% per month rate retained
  • Advance tax provisions themselves move from 207–211 to 403–408

Applies from tax year 2026-27 (from 1 April 2026).

What changed

Renumbered; the 90% test and the computation are unchanged.

Practice notes

  • Paying self-assessment tax early reduces interest but does not prevent the charge.
  • Sections 423, 424 and 425 can all apply to the same taxpayer in the same year, on different bases.

These are summaries, not the statutory text. Read the bare Act for both sections on the Income Tax Department's official site, which also has a side-by-side comparison utility.

Frequently asked

What is the interest rate under 234B in the new Income Tax Act 2025?

1% per month or part of a month under section 424, where advance tax paid is less than 90% of assessed tax.

What is section 234B called in the new Income-tax Act, 2025?

Section 234B of the Income-tax Act, 1961 corresponds to Section 424 of the Income-tax Act, 2025, which applies from 1 April 2026 (tax year 2026-27).

What changed in section 234B under the new Income Tax Act?

Renumbered; the 90% test and the computation are unchanged.

Is section 234B still applicable for FY 2025-26?

Yes. Income of FY 2025-26 (AY 2026-27) and earlier years is governed by section 234B of the 1961 Act. Section 424 of the 2025 Act applies from tax year 2026-27.

Related sections

234C→425Interest for deferment of advance tax instalments234A→423Interest for default in furnishing the return of income