I am defending an old assessment year, or a reassessment for one, and the order charges interest under s.215 or s.217 rather than s.234B. What do those sections actually require, and can the interest be waived?
Sections 215, 216 and 217 are the interest provisions that preceded s.234B and s.234C, and they are all keyed to estimates under s.209A or s.212 — both of which were omitted by the Direct Tax Laws (Amendment) Act, 1987 with effect from 1 April 1988, while s.234C(2) provides that s.234C applies to assessments for the assessment year commencing on 1 April 1989 and subsequent years. Section 215(1) charges simple interest at fifteen per cent per annum where advance tax paid on the assessee's own estimate is less than seventy-five per cent of the assessed tax (eighty-three and one-third per cent for a company), from 1 April following the financial year to the date of the regular assessment; s.216 charges interest at the same rate where the assessee under-estimated and thereby reduced either of the first two instalments, or wrongly deferred payment under s.213; and s.217 charges it where no statement or estimate was sent at all. Section 215(4) — applied to s.217 by s.217(2) — gives the Assessing Officer power to 'reduce or waive the interest payable by the assessee under this section' in such cases and circumstances as may be prescribed.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2025-04-01, reported as Income-tax Act, 1961, ss.215, 216 and 217, as printed on the departmental section pages stamped Year: 2025, with s.215(1), (4), (5) and (6) corroborated on the page stamped Year: 2024 (No. 1). It bears on section 215, section 215(4), section 215(5), section 215(6), section 216, section 217, section 209A, section 212, section 213, section 273, section 234B, section 234C of the Income Tax Act 1961, in Assessment & Scrutiny, Demand, Recovery & Stay and Reassessment & Reopening matters.
The library covers assessment years in which this scheme applied, and courts continue to cite it on the discretion point and on what 'assessed tax' means. Four features repay attention. First, s.215(5) defines 'assessed tax' for ss.215, 217 and 273 as the tax determined on regular assessment reduced by tax deductible under an enumerated and closed list of TDS sections — ss.192 to 194, 194A, 194C, 194D, 195 and 196A — so far as it relates to income subject to advance tax; that list is materially narrower than the Explanation 1 definition used for s.234B, and the difference has been argued as decisive in s.234B litigation. Second, s.215(3) makes the interest follow the assessment: where the amount on which interest was payable is increased or reduced by an order under s.147, 154, 155, 250, 254, 260, 262, 263, 264 or a Settlement Commission order under s.245D(4), the interest is increased or reduced accordingly, with a fresh notice of demand deemed to be under s.156 in the first case and a refund of excess interest in the second. Third, s.215(6) deems a first-time assessment made under s.147 to be a regular assessment for the purposes of ss.215, 216, 217 and 273 — which is how interest attaches on a reassessment where no assessment had been made before. Fourth, s.216 is discretionary in form ('he may direct'), unlike s.234B and s.234C, which are automatic; and its Explanation deems an instalment due before six months from the commencement of the previous year to have become due fifteen days after that six months.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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Section 215(1) charges simple interest at fifteen per cent per annum where in any financial year an assessee has paid advance tax under s.209A or s.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, running from 1 April next following that financial year to the date of the regular assessment, on the shortfall; the proviso substitutes 'eighty-three and one-third per cent' for 'seventy-five per cent' in the case of a company. Sub-section (2) prescribes how interest is computed where tax is paid under s.140A or otherwise before the regular assessment. Sub-section (3) requires interest to be increased or reduced where the amount on which it was payable is increased or reduced by an order under s.147, 154, 155, 250, 254, 260, 262, 263 or 264 or a Settlement Commission order under s.245D(4). Sub-section (4) confers the waiver power. Sub-section (5) defines 'assessed tax' for ss.215, 217 and 273. Sub-section (6) deems a first-time s.147 assessment to be a regular assessment for ss.215, 216, 217 and 273. Section 216 empowers the Assessing Officer, on making the regular assessment, to direct payment of simple interest at fifteen per cent per annum where the assessee under-estimated the advance tax under s.209A or s.212 and thereby reduced either of the first two instalments, or wrongly deferred payment under s.213. Section 217 charges interest at the same rate where the statement or estimate required by s.209A was not sent, and s.217(2) applies s.215(2), (3) and (4) to it. Sections 209A and 212 were each omitted by the Direct Tax Laws (Amendment) Act, 1987 with effect from 1 April 1988, and s.234C(2) provides that s.234C applies to assessments for the assessment year commencing on 1 April 1989 and subsequent years.
The pre-1989 interest scheme charges interest at a flat fifteen per cent per annum by reference to estimates filed under s.209A or s.212 and to the 'assessed tax' as narrowly defined in s.215(5); it recomputes the interest to follow any later variation of the assessment under s.215(3); it treats a first-time s.147 assessment as a regular assessment under s.215(6); and it leaves the Assessing Officer a power under s.215(4), extended to s.217 by s.217(2), to reduce or waive the interest in such cases and circumstances as may be prescribed. Section 216 is expressed as a discretion exercisable on a finding of under-estimate or wrongful deferment, in contrast with the automatic charge under s.234B and s.234C.
Not applicable — this is a statement of the statutory text as printed on the departmental section pages. The judicial treatment of the waiver power and of the appealability of the charge is dealt with in the separate entry on Central Provinces Manganese Ore Co. Ltd. v. CIT.
In such cases and under such circumstances as may be prescribed, the Assessing Officer may reduce or waive the interest payable by the assessee under this section.
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Handle my notice → Ask a CA on WhatsAppSections 215, 216 and 217 are the interest provisions that preceded s.234B and s.234C, and they are all keyed to estimates under s.209A or s.212 — both of which were omitted by the Direct Tax Laws (Amendment) Act, 1987 with effect from 1 April 1988, while s.234C(2) provides that s.234C applies to assessments for the assessment year commencing on 1 April 1989 and subsequent years. Section 215(1) charges simple interest at fifteen per cent per annum where advance tax paid on the assessee's own estimate is less than seventy-five per cent of the assessed tax (eighty-three and one-third per cent for a company), from 1 April following the financial year to the date of the regular assessment; s.216 charges interest at the same rate where the assessee under-estimated and thereby reduced either of the first two instalments, or wrongly deferred payment under s.213; and s.217 charges it where no statement or estimate was sent at all. Section 215(4) — applied to s.217 by s.217(2) — gives the Assessing Officer power to 'reduce or waive the interest payable by the assessee under this section' in such cases and circumstances as may be prescribed. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 215, section 215(4), section 215(5), section 215(6), section 216, section 217, section 209A, section 212, section 213, section 273, section 234B, section 234C of the Income Tax Act 1961. It is reported as Income-tax Act, 1961, ss.215, 216 and 217, as printed on the departmental section pages stamped Year: 2025, with s.215(1), (4), (5) and (6) corroborated on the page stamped Year: 2024 (No. 1). The library covers assessment years in which this scheme applied, and courts continue to cite it on the discretion point and on what 'assessed tax' means. Four features repay attention. First, s.215(5) defines 'assessed tax' for ss.215, 217 and 273 as the tax determined on regular assessment reduced by tax deductible under an enumerated and closed list of TDS sections — ss.192 to 194, 194A, 194C, 194D, 195 and 196A — so far as it relates to income subject to advance tax; that list is materially narrower than the Explanation 1 definition used for s.234B, and the difference has been argued as decisive in s.234B litigation. Second, s.215(3) makes the interest follow the assessment: where the amount on which interest was payable is increased or reduced by an order under s.147, 154, 155, 250, 254, 260, 262, 263, 264 or a Settlement Commission order under s.245D(4), the interest is increased or reduced accordingly, with a fresh notice of demand deemed to be under s.156 in the first case and a refund of excess interest in the second. Third, s.215(6) deems a first-time assessment made under s.147 to be a regular assessment for the purposes of ss.215, 216, 217 and 273 — which is how interest attaches on a reassessment where no assessment had been made before. Fourth, s.216 is discretionary in form ('he may direct'), unlike s.234B and s.234C, which are automatic; and its Explanation deems an instalment due before six months from the commencement of the previous year to have become due fifteen days after that six months. If it applies to you, the first step is this: Fix the assessment year before anything else. Sections 215, 216 and 217 operate on estimates under s.209A and s.212, both omitted with effect from 1 April 1988, and s.234C(2) applies s.234C from the assessment year commencing 1 April 1989; do not apply the two schemes to the same year.
Section 215(1) charges simple interest at fifteen per cent per annum where in any financial year an assessee has paid advance tax under s.209A or s.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, running from 1 April next following that financial year to the date of the regular assessment, on the shortfall; the proviso substitutes 'eighty-three and one-third per cent' for 'seventy-five per cent' in the case of a company. Sub-section (2) prescribes how interest is computed where tax is paid under s.140A or otherwise before the regular assessment. Sub-section (3) requires interest to be increased or reduced where the amount on which it was payable is increased or reduced by an order under s.147, 154, 155, 250, 254, 260, 262, 263 or 264 or a Settlement Commission order under s.245D(4). Sub-section (4) confers the waiver power. Sub-section (5) defines 'assessed tax' for ss.215, 217 and 273. Sub-section (6) deems a first-time s.147 assessment to be a regular assessment for ss.215, 216, 217 and 273. Section 216 empowers the Assessing Officer, on making the regular assessment, to direct payment of simple interest at fifteen per cent per annum where the assessee under-estimated the advance tax under s.209A or s.212 and thereby reduced either of the first two instalments, or wrongly deferred payment under s.213. Section 217 charges interest at the same rate where the statement or estimate required by s.209A was not sent, and s.217(2) applies s.215(2), (3) and (4) to it. Sections 209A and 212 were each omitted by the Direct Tax Laws (Amendment) Act, 1987 with effect from 1 April 1988, and s.234C(2) provides that s.234C applies to assessments for the assessment year commencing on 1 April 1989 and subsequent years. The matter was decided on 2025-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. The pre-1989 interest scheme charges interest at a flat fifteen per cent per annum by reference to estimates filed under s.209A or s.212 and to the 'assessed tax' as narrowly defined in s.215(5); it recomputes the interest to follow any later variation of the assessment under s.215(3); it treats a first-time s.147 assessment as a regular assessment under s.215(6); and it leaves the Assessing Officer a power under s.215(4), extended to s.217 by s.217(2), to reduce or waive the interest in such cases and circumstances as may be prescribed. Section 216 is expressed as a discretion exercisable on a finding of under-estimate or wrongful deferment, in contrast with the automatic charge under s.234B and s.234C.
Not applicable — this is a statement of the statutory text as printed on the departmental section pages. The judicial treatment of the waiver power and of the appealability of the charge is dealt with in the separate entry on Central Provinces Manganese Ore Co. Ltd. v. CIT. In the words reproduced by the source cited on this page: "In such cases and under such circumstances as may be prescribed, the Assessing Officer may reduce or waive the interest payable by the assessee under this section."
It was decided by the CBDT Circulars & Instructions on 2025-04-01 and is reported as Income-tax Act, 1961, ss.215, 216 and 217, as printed on the departmental section pages stamped Year: 2025, with s.215(1), (4), (5) and (6) corroborated on the page stamped Year: 2024 (No. 1). Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 215, section 215(4), section 215(5), section 215(6), section 216, section 217, section 209A, section 212, section 213, section 273, section 234B, section 234C, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. The pre-1989 interest scheme charges interest at a flat fifteen per cent per annum by reference to estimates filed under s.209A or s.212 and to the 'assessed tax' as narrowly defined in s.215(5); it recomputes the interest to follow any later variation of the assessment under s.215(3); it treats a first-time s.147 assessment as a regular assessment under s.215(6); and it leaves the Assessing Officer a power under s.215(4), extended to s.217 by s.217(2), to reduce or waive the interest in such cases and circumstances as may be prescribed. Section 216 is expressed as a discretion exercisable on a finding of under-estimate or wrongful deferment, in contrast with the automatic charge under s.234B and s.234C. It arises in Assessment & Scrutiny, Demand, Recovery & Stay and Reassessment & Reopening matters, on section 215, section 215(4), section 215(5), section 215(6), section 216, section 217, section 209A, section 212, section 213, section 273, section 234B, section 234C of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. For a s.215 charge, test the arithmetic against s.215(5) as it stands, not against the Explanation 1 definition used for s.234B: the reduction for tax deductible is confined to the enumerated sections and only so far as the tax relates to income subject to advance tax. Where the assessment has since been varied on appeal, revision, rectification or reassessment, apply s.215(3): interest must be recomputed to follow the varied figure, and excess interest already paid must be refunded — this is a right, not a concession. On a first-time assessment made under s.147, do not argue that there is no 'regular assessment'; s.215(6) deems it to be one for ss.215, 216, 217 and 273. If waiver or reduction is wanted, apply to the Assessing Officer under s.215(4) (and s.217(2) for s.217 interest) before doing anything else. On the Supreme Court's decision in Central Provinces Manganese Ore Co. Ltd. v. CIT, where no such application has been made there is no improper denial of waiver for a higher authority to correct. For a s.216 charge, check that the Assessing Officer has actually found an under-estimate that reduced one of the first two instalments, or a wrongful deferment under s.213; the section is permissive and depends on that finding.
Validity check could not be completed. Validity check could not be completed. Sections 215, 216 and 217 remain on the statute book and are printed in the terms set out above on the Year: 2025 departmental pages, but they operate on estimates under s.209A and s.212, both of which the departmental pages record as omitted by the Direct Tax Laws (Amendment) Act, 1987 with effect from 1 April 1988, and s.234C(2) applies the successor scheme from the assessment year commencing 1 April 1989. I did not retrieve any provision expressly limiting ss.215 to 217 to assessment years up to 1988-89, and I could not retrieve rule 40 of the Income-tax Rules, 1962, so the current status of the prescribed waiver circumstances is unknown. Each of ss.215, 216 and 217 is now printed identically on two departmental pages of different vintage (Year: 2025 and Year: 2024 (No. 1)), and every rate and percentage in this entry was corroborated on both. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Section 215 was transcribed in full from https://incometaxindia.gov.in/w/section-215-64 (heading 'Interest payable by assessee', Year: 2025), with sub-sections (1), (4), (5) and (6) transcribed again from /w/section-215-62 (Year: 2024 (No. 1)); the two pages agree, save that the -64 page prints s.215(5) with an unclosed parenthesis after '196A' and the -62 page closes it after '196A)' — a typographical difference in the departmental rendering, not a difference of substance, and I have followed the -62 rendering. Section 216 (heading 'Interest payable by assessee in case of under-estimate, etc') and s.217 (heading 'Interest payable by assessee when no estimate made') were each transcribed in full from /w/section-216-64 and /w/section-217-64 (both Year: 2025) and, on verification, again word for word from /w/section-216-62 and /w/section-217-62 (both Year: 2024 (No. 1)), so both now rest on two departmental pages of different vintage. Section 215(1), with the fifteen per cent rate, the seventy-five per cent threshold and the eighty-three and one-third per cent proviso for a company, and s.215(4), (5) and (6), were likewise re-transcribed from /w/section-215-62 and agree in every figure. The omission of s.212 was read from /w/section-212-64 (Year: 2025), which prints '212. [Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.]'; the omission of s.209A was read from /w/section-209a (Year: 2000), which prints the same amending Act and date — that page is archived and is used here only to record the fact of omission, corroborated by the identical amending Act and date on the current s.212 page. Section 234C(2) was transcribed from /w/section-234c-37 (Year: 2025). No footnote apparatus rendered on any of these pages. I could NOT retrieve the text of rule 40 of the Income-tax Rules, 1962: the departmental URL incometaxindia.gov.in/w/rule-40 returns regulation 40 ('Underwriting') of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. This entry therefore states the s.215(4) power but does not state the contents or the current status of rule 40. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The pre-1989 interest scheme charges interest at a flat fifteen per cent per annum by reference to estimates filed under s.209A or s.212 and to the 'assessed tax' as narrowly defined in s.215(5); it recomputes the interest to follow any later variation of the assessment under s.215(3); it treats a first-time s.147 assessment as a regular assessment under s.215(6); and it leaves the Assessing Officer a power under s.215(4), extended to s.217 by s.217(2), to reduce or waive the interest in such cases and circumstances as may be prescribed. Section 216 is expressed as a discretion exercisable on a finding of under-estimate or wrongful deferment, in contrast with the automatic charge under s.234B and s.234C.
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