Comparison of section 424 "Interest for defaults in payment of advance tax." between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

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....utation, rectification orders and payments made before final determination. The provision affects taxpayers required to pay advance tax and tax administration for assessment and demand processes. Effective date or enactment date: Not stated in the document. Background & Scope Statutory hooks: Clause 424 interacts with sections 404, 406, 407 (advance tax provisions), section 270(1) (determination of total income), section 279 (reassessment/recomputation), sections 287, 288, 359, 363, 365(10), 368, 377, 378 (orders affecting assessments), section 266 (payment of tax), section 267 (additional income-tax), sections 157, 159, 160 (reliefs/deductions), and section 206 (tax credits). The Clause defines the scope of interest chargeable for defaul....

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..... The statutory construction suggests interest is calculated on assessed tax subject to reductions expressly listed in subsection (2). Legislative intent: Not stated in the document beyond the text; interpretive principles indicated by the text are limited to the explicit thresholds and reduction items. Exceptions/Provisos The Clause contains no express discretionary exceptions beyond the listed reductions in computing "assessed tax". There is an implicit exception where advance tax paid is at least 90% of assessed tax - in which case subsection (1)(b) does not trigger interest. Provisos about inclusion or exclusion of additional income-tax u/s 267 are given in subsection (3). Any further exceptions or administrative relaxations: Not stat....

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....x deducted/collected at source (Chapter XIX-B) which reduce the "assessed tax" base for interest; (iv) payment u/s 266 and other payments, which reduce interest liability per subsection (4); and (v) reassessment/recomputation and rectification orders (ss.279, 287, 288, 359, 363, 365(10), 368, 377, 378) which increase or reduce the interest and trigger demand or refund. No reference to rules or circulars outside these sections: Not stated in the document. Potential interpretive tensions include the precise operation when both section 270(1) determination and a regular assessment are made, and the drafting distinction between conjunctive vs disjunctive endpoints (see earlier differences). Differences between Section 424 of the Inco....

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.... as a result of an order of reassessment or recomputation u/s 279, the amount on which interest was payable ... is increased, the assessee shall be liable to pay..." whereas the Bill (Document 2) begins "Where, the amount on which interest was payable ... is increased, as a result of an order of reassessment or recomputation u/s 279, the assessee shall be liable..." * Practical impact: purely drafting/sequence variation without a clear substantive change. * Subsection (6)(a) form phrasing: The Act (Document 1) states "in such form as may be prescribed specifying the sum payable" while the Bill (Document 2) states "in the form as prescribed specifying the sum payable". * Practical impact: negligible - both indicate prescribed form; the....

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....n the document. Key Takeaways * The Clause imposes simple interest at 1% per month or part-month for underpayment/non-payment of advance tax, from 1 April following the tax year to assessment determination or completion of regular assessment. * A 90% safe harbour is provided: interest triggers where advance tax paid is less than 90% of assessed tax. * "Assessed tax" is expressly reduced by specified items (TDS/TCS under Chapter XIX-B, reliefs under ss.157, 159, deductions under s.160, and certain tax credits), which directly affects interest computation. * Reassessment/recomputation that increases the taxable amount attracts additional interest computed by formula A = B - C for the period from 1 April to the date of reassessment; r....