Section 215 of Income Tax Act, 1961 - Interest Payable by Assessee
Section 215 of the Income-tax Act, 1961 dealt with interest payable by an assessee for a shortfall in advance tax under the earlier statutory scheme. It is a historical provision: it does not govern assessments for assessment year 1989-90 or later. For later years under the 1961 Act, interest for advance-tax defaults is principally dealt with under sections 234B and 234C.
Meaning and scope of Section 215
Section 215 historically imposed simple interest where an assessee who estimated and paid advance tax under the then-applicable provisions paid less than the prescribed proportion of assessed tax. Its operation must be read with the later statutory exclusion of sections 214 to 217 for assessment year 1989-90 onwards.
Explanation of the historical provisions
Sub-section (1): Shortfall in advance tax
Where advance tax paid on the assessee's own estimate was less than 75% of assessed tax, interest was calculated at the historical rate of 15% per annum on the shortfall, from 1 April following the financial year until regular assessment. A historical proviso substituted 83 1/3% for 75% for companies. These thresholds and the rate relate to the old law.
Sub-section (2): Tax paid before assessment
Payments made before regular assessment, including under section 140A, affected the period and outstanding amount on which historical interest was computed.
Sub-section (3): Recalculation following orders
Interest could be increased or reduced following specified assessment, rectification, appeal or revision orders. Increased interest could be recovered by a demand notice under section 156; excess interest paid could be refunded.
Sub-section (4): Reduction or waiver
The Assessing Officer could reduce or waive interest in prescribed cases and circumstances. This was not a general or automatic exemption.
Sub-section (5): Assessed tax
For the purposes of the historical provision, assessed tax referred broadly to tax determined on regular assessment after the statutory reductions for deductible tax applicable to income subject to advance tax. The precise computation depended on the version of the law applicable to the relevant assessment year.
Sub-section (6): First assessment under Section 147
Where the first assessment for an assessment year was made under section 147, that assessment was treated as a regular assessment for the specified historical provisions.
Interest on advance-tax defaults under subsequent law
| Provision | Subject | General operation under the 1961 Act |
|---|---|---|
| Section 208 | Liability to pay advance tax | Advance tax generally applies where estimated liability reaches the statutory threshold, subject to exceptions. |
| Section 211 | Advance-tax instalments | Specifies payment dates and cumulative percentages, with special treatment for eligible presumptive-tax taxpayers. |
| Section 234B | Default in payment of advance tax | Generally levies simple interest at 1% per month or part thereof where advance tax was required but not sufficiently paid, subject to statutory computation rules. |
| Section 234C | Deferment of instalments | Generally levies interest for shortfalls in prescribed advance-tax instalments, subject to statutory exceptions. |
For tax years governed by the Income-tax Act, 2025, consult the corresponding provisions of that Act and applicable rules rather than assuming that the numbering or wording of the 1961 Act continues unchanged.
Illustration of the distinction
An assessee assessing advance-tax interest for a recent tax year should not multiply a shortfall by the 15% rate found in historical section 215. Instead, the applicable provisions concerning the amount paid, payment dates, assessment year or tax year, and statutory exceptions must be applied.
Historical text and legislative background
The original page reproduced the earlier version of section 215, including the provisions on shortfall, pre-assessment payments, consequential adjustments, waiver, assessed tax and reassessment. It also identified amendments made by the Finance Acts and other amending Acts between 1969 and 1989. This material is retained here as historical context, not as current operative guidance.
Read the historical text reproduced on the original webpage
215 Income Tax Act - Interest payable by assessee Section 215 of Income Tax Act 1961 - Interest payable by assessee 1 (1)Where, in any financial year, an assessee has paid 2advance tax under section 209A or section 212 on the basis of his own estimate (including revised estimate), and the advance tax so paid is less than seventy-five per cent. of the assessed tax, simple interest at the rate of3 fifteen per cent. per annum from the 1st day of April next following the said financial year up to the date of the regular assessment shall be payable by the assessee upon the amount by which the advance tax so paid falls short of the assessed tax: 4 Provided that in the case of an assessee, being a company, the provisions of this sub-section shall have effect as if for the words "seventy-five per cent.", the words "eighty-three and one-third per cent." had been substituted. 5 (2) Where before the date of completion of a regular assessment, tax is paid by the assessee under section 140A or otherwise,- (i) interest shall be calculated in accordance with the foregoing provision up to the date on which the tax is so paid ; and (ii) thereafter, interest shall be calculated at the rate aforesaid on the amount by which the tax as so paid (in so far as it relates to income subject to advance tax) falls short of the assessed tax. 6 (3) Where as a result of an order under section 147 or section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 7 or an order of the Settlement Commission under sub-section (4) of section 245D, the amount on which interest was payable under sub-section (1) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and- (i) in a case where the interest is increased, the 8 Assessing Officer shall serve on the assessee, a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly; (ii) in a case where the interest is reduced, the excess interest paid, if any, shall be refunded. (4) In such cases and under such circumstances as may be prescribed, the 9 Assessing Officer may reduce or waive the interest payable by the assessee under this section. (5) In this section and sections 217 and 273, "assessed tax" means the tax determined on the basis of the regular assessment (reduced by the amount of tax deductible in accordance with the provisions of sections 192 to 194, 10 section 194A, section 194C 11 , section 194D 12, section 195 and section 196A so far as such tax relates to income subject to advance tax and so far as it is not due to variations in the rates of tax made by the Finance Act enacted for the year for which the regular assessment is made. 13(6) Where, in relation to an assessment year, an assessment is made for the first time under section 147, the assessment so made shall be regarded as a regular assessment for the purposes of this section and sections 216, 217 and 273. ---------------------- 1. Subs. by Act 14 of 1969, s. 18, for sub-section (1) (w.e.f. 1-4-1970). 2. Subs. by Act 19 of 1978, s. 27, for "advance tax under section 212 on the basis of his own estimate" (w.e.f. 1-6-1978). 3. Subs. by Act 67 of 1984, s. 24, for "twelve per cent." (w.e.f. 1-10-1984). 4. Ins. by Act 44 of 1980, s. 32 (w.e.f. 1-9-1980). 5. Subs. by Act 42 of 1970, s. 37, for sub-section (2) (w.e.f. 1-4-1971). 6. Subs. by Act 67 of 1984, s. 36, for sub-section (3) (w.e.f. 1-4-1985). 7 Ins. by Act 4 of 1988, s. 83 (w.e.f. 1-4-1989). 8. Subs. by s. 2, ibid., for "Income-tax Officer" (w.e.f. 1-4-1988). 9 Ins. by Act 14 of 1969, s. 18 (w.e.f. 1-4-1970). 10. Subs. by Act 16 of 1972, s. 38, for "section 194A" (w.e.f. 1-4-1972). 11 Ins. by Act 21 of 1973, s. 19 (w.e.f. 1-4-1973). 12. Subs. by Act 3 of 1989, s. 33, for "and section 195" (w.e.f. 1-4-1989). 13. Ins. by Act 67 of 1984, s. 36 (w.e.f. 1-4-1985).
Official legislation and references
- Income Tax Department: Income-tax Act, 1961
- Income Tax e-Filing Portal
- India Code: Central legislation and statutory text
- Income Tax Department official website
Frequently asked questions
Is Section 215 applicable to current assessment years?
No. It is a historical advance-tax interest provision. Later assessment years under the 1961 Act are governed by the relevant subsequent provisions, notably sections 234B and 234C.
Is the historical 15% interest rate currently applicable?
No. The 15% rate reproduced in section 215 is historical and must not be confused with rates under later law.
Can advance-tax interest be waived?
Waiver or reduction depends on the law and applicable orders for the relevant period. The historical discretion in section 215(4) does not itself establish a current right to waiver.
Legal information reviewed for October 2026. This article is general information, not individual tax advice.