The Statutory Brief

IT Act 1961 → 2025 / Section 234C

Interest

Section 234C → Section 425

Interest for deferment of advance tax instalments

Section 234C of the old Income-tax Act, 1961 · new section 425 under the Income-tax Act, 2025

New reference Section 425

Income-tax Act, 1961Section 234C

  • Instalments due 15 June, 15 September, 15 December and 15 March
  • 1% per month for 3 months on shortfall in each of the first three instalments; 1 month on the last
  • Tolerance: no interest if 12% and 36% paid by June and September
  • Relief for capital gains and other income arising after an instalment date

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

Income-tax Act, 2025Section 425

  • Same charge, now section 425
  • Effectively 3% on each of the first three shortfalls and 1% on the last
  • 12% and 36% tolerances retained
  • Relief for capital gains, lottery and new business income retained

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

What changed

Renumbered and expressed in a simplified rate format. The economic effect is the same as under 234C.

Practice notes

  • Section 425 looks at dates; section 424 looks at the annual total. Paying everything on 15 March avoids 424 but not 425.
  • Presumptive taxpayers under section 58 continue to pay advance tax in a single instalment by 15 March.

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 section 234C called in the new Income-tax Act, 2025?

Section 234C of the Income-tax Act, 1961 corresponds to Section 425 of the Income-tax Act, 2025, which applies from 1 April 2026 (tax year 2026-27).

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

Renumbered and expressed in a simplified rate format. The economic effect is the same as under 234C.

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

Yes. Income of FY 2025-26 (AY 2026-27) and earlier years is governed by section 234C of the 1961 Act. Section 425 of the 2025 Act applies from tax year 2026-27.

Related sections

234B→424Interest for default in payment of advance tax234A→423Interest for default in furnishing the return of income44AD→58Presumptive taxation for small businesses and professionals