Advance tax default interest applies at 1% monthly when tax is unpaid or short by more than the prescribed threshold.

Liability to pay simple interest for default in advance tax arises where an assessee liable to pay advance tax fails to pay it or pays less than 90% of the assessed tax. The interest is chargeable at 1% for every month or part of a month from 1 April following the tax year until determination of total income or completion of regular assessment, as applicable, on the unpaid assessed tax or the shortfall amount. "Assessed tax" is the tax on total income determined under the relevant assessment provisions, reduced by specified deductions, reliefs, and tax credits.

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