Section 425 - Interest for deferment of advance tax

Section 404: Advance tax instalment shortfalls attract 3% then 1% interest with specified threshold and exceptions

Where an assessee liable for advance tax under section 404 fails to pay required instalments, interest is charged on the shortfall: 3% on deficits until 15 June, 15 Sept, and 15 Dec (corresponding to 15%, 45%, 75% of tax due on returned income) and 1% on shortfall to 15 March (100% due). No interest arises if payments by 15 June and 15 Sept reach at least 12% and 36% respectively. Taxpayers covered by presumptive/profit-declaration provisions or otherwise liable under section 404 pay 1% on March shortfall. No interest on shortfalls caused by underestimation of specified incomes (capital gains, certain other income, new business income, dividends) if tax on that income is paid in later instalments or by 31 March. 'Tax due on returned income' excludes specified TDS/TCS, foreign tax reliefs, and allowed credits.