Failing to pay advance tax can lead to several consequences under the Income Tax Act, 1961. These consequences generally involve the imposition of interest and penalties. Here are the key repercussions:

1. Interest Under Section 234B

Interest for Default in Payment of Advance Tax:

• If an individual has not paid at least 90% of the assessed tax by the end of the financial year, they are liable to pay interest under Section 234B.
• The interest is charged at 1% per month or part of a month from April 1 of the assessment year until the date of actual payment of the outstanding tax amount.

2. Interest Under Section 234C

Interest for Deferred Payment of Advance Tax:

• If an individual does not pay the required advance tax installments by the due dates, they are liable to pay interest under Section 234C.
• The interest is calculated at 1% per month or part of a month on the shortfall from the due date until the actual date of payment.

3. Penalty Under Section 221

Penalty for Non-payment of Tax:

• In addition to the interest, the Assessing Officer may impose a penalty under Section 221 if the taxpayer defaults in making the payment of advance tax.
• The penalty amount can be up to the outstanding tax amount.