The Finance Ministry on Tuesday amended the Income Tax (No. 2) Bill, 2025 and made an important change. This change is about interest on low payment of advance tax. In the new amendment, the interest rate has been made in accordance with the provisions of the current Income Tax Act, 1961. Now if there is less payment of advance tax from a taxpayer, then 3% interest will have to be paid on it.
When to pay advance tax
According to the rule, taxpayers whose annual tax liability is ₹ 10,000 or more, they have to deposit this amount as advance tax in four installments. These dates are fixed – 15 June, 15 September, 15 December and 15 March. If a taxpayer is unable to deposit the entire amount on any one of these dates, then he has to pay interest. This interest applies only to the remaining amount.
What was the provision earlier, now what changed
According to Nangia Anderson LLP partner Sandeep Jhunjhunwala, the first bill clause 425 provided that if the lack of advance tax is completed the next day, then only one month interest will be charged 1%. But this was not in line with the current law. Under the Income Tax Act, 1961, if there is a delay even one day from the due date, then a minimum of three months interest has to be paid. The new amendment removed this confusion and the interest provision was made according to the old law.
New Income Tax Bill passed in Lok Sabha
Finance Minister Nirmala Sitharaman introduced the New Income Tax Bill 2025 in the Lok Sabha on 11 August 2025 and surprisingly, the bill was passed from the lower house in just four minutes. Preparations for this bill were going on for several days and in the budget 2025, the Finance Minister also announced to table it.
Now the next step is to be passed in the Rajya Sabha. After getting approval from there and the President’s signature, this will be made a law. With the implementation of the new law, the income tax will replace the income tax law of about 60 years old.
The government claims that this new law will be easier in terms of both structure and language, so that the common taxpayer can also understand it easily. However, in matters related to interest, the provision of the old law has been kept back, so that the rules remain clear and uniform as before.