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Interest keeps running on unpaid tax until it is assessed and paid. Paying the tax you accept early reduces interest. It also shows good faith in the proceedings.
ITR
Paying tax early during reassessment to cut interest
Updated . Every paid answer is checked by a CA. Free AI answers are labelled until a CA verifies them.
Provisions
Sec 234B (now Sec 424); Sec 140A (now Sec 266); Sec 148 (now Sec 280)
Analysis
Sec 234B interest at 1% a month runs from the start of the assessment year, so for an old year it can already be large; three years on ₹1,00,000 of tax is about ₹36,000. Paying now stops it growing on the amount paid. Use the right assessment year and the right minor head as advised, and mention the payment in your reply or return. Pay only on what you accept; disputed amounts can be argued.
Close
- Work out the tax on the part you accept.
- Pay through e-Pay Tax for the correct assessment year.
- Include it in the Sec 148 return or tell the officer.
- Keep the challan for the order and any appeal.
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