The Lok Sabha Select Committee has corrected a drafting error in the revised Income Tax Bill 2025, ensuring that the rules for charging interest on advance tax shortfalls remain unchanged from the current law. This correction means that there is no increase in the financial burden on taxpayers.
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The initial draft of the bill had proposed a simple interest of 1% per month for delays in advance tax payments. However, the committee’s correction reinstates the long-standing, fixed-rate system from the Income Tax Act, 1961.
Taxpayers will continue to be charged:
- A flat 3% interest for any shortfall in the first three quarterly installments (due on June 15, September 15, and December 15).
- A flat 1% interest for any shortfall in the final installment (due on March 15).
According to tax experts, this change is purely a matter of presentation. The previous language of “1% per month” for a quarter was effectively the same as a flat 3% charge for that quarter. By correcting the text, the new bill now clearly mirrors the existing law, avoiding confusion and confirming that the total interest cost for taxpayers remains the same.
