Section 234B and 234C interest, side by side

Both Section 234B and Section 234C charge interest at the same 1% a month for underpaying tax through the year — which is exactly why the two get confused for each other. They apply to different shortfalls, at different points in time, and behave very differently once triggered.

Two different triggers for two different shortfalls

234C checks whether you hit each of the four instalment checkpoints through the year — 15%, 45%, 75%, 100% of your net liability, due by 15 June, 15 September, 15 December, and 15 March respectively. 234B is a completely separate check that only looks at one date: whether at least 90% of your total tax liability was paid as advance tax by 31 March. Miss an instalment along the way but still cross 90% by year-end, and only 234C applies. Fall short of 90% by year-end, and 234B applies on top — regardless of how the instalments went individually.

234C: four fixed checkpoints through the year

234C’s interest is capped and predictable by design: a shortfall at any of the first three checkpoints costs exactly 3 months’ worth of interest (1% × 3 = 3% of that shortfall), and a shortfall at the fourth costs exactly 1 month’s worth — fixed by the instalment itself, regardless of how quickly or slowly it’s eventually paid off. The sibling article on this site’s advance tax instalment schedule works through a full example: a ₹90,000 net liability, paid unevenly across the year, produces cumulative shortfalls of ₹3,500 → ₹5,500 → ₹2,500 → ₹0 at the four checkpoints, for ₹345 of total 234C interest — every rupee of it locked in the moment each due date passed.

234B: a single, open-ended charge after year-end

234B works differently in two important ways. First, it’s all-or-nothing on a single 90% threshold — not four separate cumulative checkpoints. Second, and more consequentially, its interest isn’t fixed at a flat number of months the way 234C’s is — it runs from 1 April of the following financial year all the way until the shortfall is actually paid (or the return is filed), at 1% for every month or part of a month that passes. The longer the balance goes unpaid, the more it costs, with no cap.

That open-ended quality is the practical difference that matters most: a 234C shortfall is a fixed, one-time cost the moment a due date passes, however long you subsequently take to pay it. A 234B shortfall keeps accruing for as long as the balance remains unpaid, which makes clearing it quickly — rather than treating it like any other bill — the only way to actually control its cost. This site’s own Advance Tax Calculator models 234C’s four fixed checkpoints in full, but doesn’t track 234B, since that depends on a payment or filing date the calculator doesn’t collect.