NEW DELHI: The Finance Ministry has issued a corrigendum to correct a drafting error in the newly introduced Income Tax Bill, 2025, clarifying the penal interest on shortfalls in advance tax payments.
The amendment clarifies that penal interest on shortfalls in advance tax payments remains unchanged at 3 per cent per quarter, with 1 per cent per month for three months. Notably, earlier, there was confusion that the interest rate was increased to 3 per cent per month.
The draft Clause 425 in the newly tabled Income Tax Bill incorrectly specified an interest of 1 per cent per month or part of a month on the shortfall in advance tax payments.
The corrigendum ensures the tax regime remains exactly as it was, which is 1 per cent interest for each delayed instalment, translating to a 3 per cent penalty for quarterly defaulters.
For the payment of advance tax a day late, you’re liable for the full 3 per cent penalty per instalment, not a cumulative monthly charge.
On August 11, the Lok Sabha passed the modified new Income-Tax Bill, 2025, and the Taxation Laws (Amendment) Bill, 2025.
The Bill now needs to be passed by the Rajya Sabha to replace the current Act, and then it will seek the President’s nod. Once enacted, the new I-T Bill will replace the archaic six-decade-old income tax law.
Agencies