• Dec
  • 09
  • 2013

How to Calculate Interest U/s. 234A, 234B, 234C

DUE DATES FOR FILING TAX RETURNS

WHAT ARE THE DUE DATES FOR FILING OF RETURNS?

The Due dates for filing Income Tax returns are:-

1. Where the assessee is a Company – 30th September of the Assessment Year.

2. Where the assessee is a person other than a company:-

a) where accounts of the assessee are to be Audited or a working partner of a firm whose accounts are required to be audited under the Income Tax Act or any other law – 30th September of the Assessment Year.

b) Any other assessee  – 31st July of the Assessment Year.

 CONSEQUENCES OF SUBMISSION OF RETURN AFTER DUE DATE

If a return is submitted after the due date, the following consequences will be applicable:

1. The assessee will be liable for penal interest under section 234A.

2. A penalty of Rs 5,000 may be imposed under section 271F if belated return is submitted after the end of the assessment year.

3. If the return of loss is submitted after the due date, a few losses cannot be carried forward.

4. If the return is submitted belated, deductions allowable under certain sections will not be available.

INTEREST U/S. 234-A FOR LATE
OR NON-FURNISHING
OF INCOME TAX RETURN

For     defaults in furnishing Return of income Simple interest @ 1% for every month or Part thereof from the due date of filing of the Return to the date of furnishing of the return & in case return is not filed, it is upto the date of completion of assessment u/s 144. The interest is calculated on the amount of the tax on the total assessed income as determined under sub-section (1) of section 143 or on regular assessment u/s 143(3) as reduced by the Advance Tax, if any, paid and any tax deducted or collected at source.

 IF AN ASSESSEE DOES NOT FILE HIS RETURN OF INCOME, IS ANY PENALTY IMPOSABLE UPON HIM?

Yes, Penalty of Rs. 5000 is imposable for non-filing of return within the assessment year. Interest is also chargeable for non-filing or late filing, as shown above.

IS TAX TO BE PAID DURING THE FINANCIAL YEAR ON THE BASIS OF PAY AS YOU EARN?

Yes, Such payments have to be made in installments and are known as ‘Advance-Tax’ payments. However the liability for payment of advance tax arises only where the amount of such tax payable by the assessee during that year is Rs. 5,000 or more.

The due dates and the percentage of installments of Advance Tax for assessees other than Companies are as below :-

Due Date of installments                          Amount payable
1st on or before 15th September. Amount not less than 30% of such advance tax.
2nd on or before 15th December. Amount not less than 60% of such advance tax after deducting amount paid in earlier installment.
3rd on or before 15th March. Entire balance amount of such advance tax.

 In case of companies, there are 4 installments of advance tax payable on or before 15th June (15%); 15th Sept. (45%); 15th Dec. (75%); & balance amount of Advance Tax payable by 15th March. Also, any amount paid by way of Advance Tax on or before the 31st March of that year, is treated as Advance Tax Paid during that Financial Year. The percentages of 45% and 75% specified with reference to dates of 15th Sept. and 15th Dec. include the amount of advance tax paid earlier during the year.

IF THE TAX PAYER FAILS TO PAY 90% TAX PLUS APPLICABLE INTEREST THEN HOW IS INTEREST FOR SHORT PAYMENT OF SUCH ADVANCE-TAX CALCULATED?

INTEREST U/S. 234-B FOR SHORT PAYMENT OF ADVANCE
TAX

Shortfall in payment of Advance tax of more than 10%. Simple interest @ 1% for month or part thereof is chargeable w.e.f. 1st April of the Assessment Year to the date of determination of income u/s.        143(1)   or regular assessment u/s        143(3)   on the  assessed tax.
‘‘Assessed tax’’ means the tax on the total income determined under sub section (1) of section No. 143 or on regular assessment u/s 143(3), as reduced by the amount of tax deducted or collected at source.

 HOW IS INTEREST FOR DEFERMENT OF ADVANCE-TAX CALCULATED?

(A) INTEREST U/S. 234-C FOR DEFERMENT OF ADVANCE
TAX (Non Corporate assessees)

1. If no advance tax is paid or the advance tax paid in 1st installment on or before 15th September is less than 30% of the tax payable on the returned income as reduced by taxes deducted at source. Simple interest @ 1% p.m. is chargeable on the amount of shortfall for a period of 3 months.
2.  If no advance tax is paid or if the advance tax paid in 2nd installment on or before 15th December is less than 60% inclusive of 1st installment of the tax payable on the returned income as reduced by taxes deducted at source. Simple interest @ 1% p.m. is chargeable on the amount of shortfall for a period of 3 months.
3. If the advance tax paid on the current income on or before the 15th day of March is less than the tax due on the returned income. Simple interest @ 1% is chargeable on the  amount of shortfall from the tax due on the returned income.
B. INTEREST U/S 234C FOR THE CORPORATE ASSESSEES
1. If advance tax paid on or before June 15th is less than 12%. Simple interest @ 1% p.m. is chargeable on the amount of shortfall for a period of three months.
2. If advance tax paid on or before Sept. 15th is less than 36%. Simple interest @ 1% p.m. is chargeable on the amount of shortfall for a period of three months.
3. If advance tax paid on or before Dec., 15th is less than 75%. Simple interest @ 1% p.m. is chargeable on the amount of shortfall for a period of three months.
If advance tax paid on or before March 15th is less than tax due on returned income (100%). Simple interest @ 1% is chargeable on the amount of shortfall from the tax due on the returned income.

 However, no interest is leviable if the short fall in payment of advance-tax is on account of under estimation or failure to estimate the amount of capital gains or any income from winnings from lotteries, crossword puzzles, races, and other games including an entertainment program on television or electronic mode, in which people compete to win prizes etc., and the assessee has paid the tax on such income as part of the remaining instalments of advance tax which are due or if no instalment is due, by 31st March, of the Financial Year.

WHAT ARE THE DUE DATES FOR FILING OF WEALTH TAX RETURNS?

The due dates for filing Wealth Tax returns by different assessees, are the same as that given above for filing Income Tax returns.

WHAT ARE THE CONSEQUENCES OF NOT FILING OR LATE FILING OF WEALTH TAX RETURNS?

Where the assessee had defaulted in timely furnishing of his return of wealth, then penal interest @ 1% for every month or part of a month of delay is chargeable for Non/Late filing of return.

(Republished with Amendments)

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Sandeep Kanoi

6 Responses to “How to Calculate Interest U/s. 234A, 234B, 234C”

  1. Umesh Desai says:

    Sir,
    I am a sr citizen and my total income by interest on deposits is 4,76,500. I have paid advance tax Rs10,000 on 13th Dec 2013. Now from the tax calculator of IT my payable tax is 20670+413+207=21270.Minus ad.tax 10000=11270. Should i pay any interest now while paying the balance amount?

  2. Parveen says:

    As you say above that advance tax limit (for payment of advance tax) is Rs. 5000/-, but according to knowledge it is Rs. 10000/-

  3. Sabin Bhaskar says:

    AS provided under Sec. 208, the liability to pay advance tax arises only where the amount of tax payable by the assessee during that year is Rs. 10,000 or more and not 5000.

  4. mamta says:

    i have filed my orginal return in sept that is within d due date and revised the same in march (increasing the income and taking credit for tds) advance tax payment is made on 20th march..234B Will be applicable for how many months

  5. VASU says:

    Sir,

    I filed ITR 2 return before the due date of A.Y.2011-12, when I am filing the revised return of the same in the PART B interest is calculating in 234A instead of 234B&C.  How can I rectify the mistake.

    Kindly help me,
    Thanking you,

  6. Manoj Anand says:

    Can an excel utility be provided?

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