Pay additional taxes now on FY25 income to save on interest outgo

DON'T WAIT TILL SEPT 15 ITR FILING DEADLINE

- SAIKAT NEOGI

WHILE THE CENTRAL Board of Direct Taxes has extended the deadline to file income tax returns for AY 2025-26 to September 15, 2025, an assessee should not delay paying the additional tax due until the due date of ITR filing. Delaying tax payment will result in additional interest charges under Sections 234B and 234C of the Income Tax Act.

Interest under Section 234C is computed till March 31 of the year and is applicable on shortfall in payment of advance tax by that date. On the other hand, interest under Section 234B is applicable if advance tax paid is less than 90% of the total tax liability and is computed starting from April 1 of the subsequent year till the date when the return is filed.

Vishwas Panijar, partner, Nangia Andersen, says, interest at the rate of 1% is calculated on the whole month (even if the delay is for a part of the month). "If a return is filed, for instance, on August 2, interest under Section 234C would be applicable for the whole month of August," he says.

Avoid last-minute rush