Modernizing Interest Liability for Advance Tax Defaults : Clause 424 of the Income Tax Bill, 2025 vs. Section 234B of the Income-tax Act, 1961

Interest on advance tax: default triggers automatic monthly interest until assessment or regular assessment is completed.

Clause 424 establishes interest for failure to pay advance tax or where advance payments are below the prescribed benchmark, charging monthly interest from the first April following the tax year until determination of total income or completion of regular assessment. Interest is computed on net assessed tax after reductions for TDS/TCS, foreign tax reliefs and specified credits. The clause clarifies interpretative points about regular assessments, excludes certain additional income-tax from the assessed base, allows reduction of interest upon pre-assessment payment, and prescribes additional interest on increments arising from reassessment.