Date for Advance tax is nearing and all the Assessees and their Tax Consultant must be busy in calculating advance tax payable for the Month of March. In this article we are discussing Interest payable Under Section 234A, 234B, 234C of the I.T. Act for default in furnishing return of Income, default in payment of Advance tax and for deferment of Advance tax .
Section 234A – Interest for default in furnishing return of Income
(A) Where the return of income for any Assessment year is furnished after the due date specified in section 139(1) or is not furnished the assessee shall be liable to pay simple Interest @ 1% for every month or part of a month.
Section 139(1) specifies due dates for filing voluntary returns of a company, a person (other than a company), or any other assessee.
(B) The interest shall be payable for the period commencing from the date immediately following the due date and –
(1) Where the return is furnished after due date, ending on the date of furnishing the return; or
(2) Where no return has been furnished, ending on the date of completion of Assessment u/s 144. (Best Judge Assessment)
(C) The Interest shall be calculated on amount of tax on total income as determined u/s 143(1) or on regular assessment as reduced by the advance tax pain and any tax deducted or collected at source and relief from double taxation u/s 90, 90A or deduction from double taxation u/s 91 and amount of MAT credit allowed to be set off u/s 115JAA.
Key Note – Pay Your Tax Before the Due Date of Filing Your Return to avoid Interest U/s. 234A of the Income Tax Act, 1961.
Section 234B – Interest for defaults in payment of Advance tax
(A) Where in any financial year, an assessee who is liable to pay advance tax u/s. 208 has failed to pay such tax or the advance tax paid by such assessee is less than 90% of the assessed tax, the assessee shall be liable to pay simple interest @ 1% for every month or part of a month.
(B) The period for which interest is payable would be the period from the first day of April next following such financial year to the date of determination of total income u/s. 143(1). However, if regular assessment u/s. 143(3) is completed, then interest is chargeable up to the date of regular assessment.
(C) The amount on which interest shall be calculated shall be the amount equal to the assessed tax or on the amount by which the advance tax paid falls short of the assessed tax.
Key Note – Pay 90% of Your Total Tax Payable after TDS on or before 31st March to avoid Interest U/s. 234B.
Section 234C – Interest for deferment of Advance tax
(A) In the case of All Assessees calculation of interest u/s. 234C shall be as follows: Where the advance tax paid by the company on its current income on or before 15th June, 15th September, 15th December is less than 15%, 45% and 75% respectively on the returned income, then the company shall be liable to pay simple interest at the rate of 1% per month for a period of three months on the amount of the shortfall.
(B) Where the whole amount of advance tax paid by any assessee on or before 15th March is less than the tax due on the income returned then the assessee shall be liable to pay simple interest @ 1% on the amount of shortfall from the tax due on the returned income. This applies to companies as well as to other assessees.
(C) An assessee who declares profits and gains in accordance with the provisions of section 44AD or section 44ADA, as the case may be, who is liable to pay advance tax under section 208 has failed to pay such tax or the advance tax paid by the assessee on its current income on or before the 15th day of March is less than the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of one per cent on the amount of the shortfall from the tax due on the returned income.
(C) Where the whole amount of advance tax paid by any assessee on or before 15th March is less than the tax due on the income returned then the assessee shall be liable to pay simple interest @ 1% on the amount of shortfall from the tax due on the returned income. This applies to companies as well as to other assessees.
(D) If the shortfall in the payment of the tax due on the returned income is on account of underestimation or failure to estimate –
(1) Capital gains
(2) Winnings from lotteries, crossword puzzles, races (including horse races), card games and any other activity in the nature of gambling, betting etc. or
(3) income under the head “Profits and gains of business or profession” in cases where the income accrues or arises under the said head for the first time; or
(4) income of the nature referred to in sub-section (1) of section 115BBDA,
and if the assessee has paid the amount of tax payable in respect of the above mentioned income as part of the remaining installments of advance tax which are due or where no such installments are due, by the 31st March of the financial year, no interest shall be leviable in respect of such shortfall.
(E) “Tax due on the returned income” means the tax chargeable on the total income declared in the return of income furnished by the assessee for the assessment year commencing on the 1st day of April immediately following the financial year in which the advance tax is paid or payable as reduced by the following items:
- The amount of tax deductible or collectible at source on any income which is subject to such deduction or collection and which is taken into account in computing such total income,
- Any relief of tax allowed under section 89;
- Any relief of tax allowed under section 90 on account of tax paid in a country outside India;
- Any relief of tax allowed under section 90A on account of tax paid in a specified territory outside India referred to in that section;
- Any deduction, from the Indian income-tax payable, allowed under section 91, on account of tax paid in a country outside India; and
- Any tax credit allowed to be set off in accordance with the provisions of section 115JAA or section 115JD.. (Explanation to Section 234C).
Keynote – Pay 100% of Your Total Tax Payable before 31st March to avoid Interest U/s. 234C.
Please Note- As Per Rule 119A of Income Tax Rules Any fraction beyond the nearest multiple of Rs. 100/- will be ignored in the calculation of interest payable or receivable by the assessee.
Download Interest Calculator U/s 234A, 234B, 234C of the Income Tax Act, 1961
(Republished with amendments)
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what is the position of section 234E as on date .since some court judgement is available that Prior to 01.06.2015 this 234E is not valid.Pl advice.
i filed my itr ay 2017-18 and rebate u/s 89(i) of Rs. 41670/ due arrear salary rcd. above itr total tax of Rs. 57087/- 41670= tax payable Rs. 15417/ out of that tds deducted rs. 15340/ and paid self tax rs. 80/ –
but in order 143(1) demand payable of Rs. 5440/- is wronge. pl tell me what i can do
An NRI Assessee had sold a property on 18.03.2016 and received capital gain on Rs.45,25,450/-. He didn’t pay any advance tax on or before 15.03.2016 since he sold the property after 15.03.2016.
I have received intimation u/s 143(1) from CPC, showing ineterst u/s 234C for one month.
Kindly explain whether any 234C interest is applicable. If yes for how may months?
Please reply any immediately.
if a company earned his income after 15th march, so there is any liability for payment of Advance tax.
i have tax liability of Rs. 22974/- for the accounting year 2016-17. I have paid advance tax of Rs. 10000/- on 13.8.2015. I have paid another Rs. 10000/- only on 28.12.
2015. there is a shortfall of Rs. 3785/- as on 15-12-2014. how much interest have I to pay under sec.234 C for this shortfall of Rs. 3785/- ?
I AM HAVING TAX LIABILITY OF Rs. 22974/ FOR 2016-17 (ACTG. YEAR). I HAVE PAID Rs. 10000/- ON 13.8.2015. I HAVE ALSO PAID ANOTHER Rs. 10000/- ON 28.12.2015. AS PER THE PROVISIONS , THERE IS A SHORT FALL OF Rs. 3785/- FOR A PERIOD FROM 15.12.2015 TO 28.12.2015. HOW MUCH INTEREST UNDER 234 C HAVE I TO PAY? PLEASE ADVISE
Inadvertently i failed to pay tax on earned interest, though submitted 15G for previous AY. What is the remedy.
Query of Interest 234C
Regarding 234c
I have sold a property on 10/03/2015
Is there any 234c penalty while filing my e retunn
By 30th sep 2015.pl clarify.
i have a tax due on returned income is 15000 which is after deductible of tds and advance tax is paid 14000( 15.9.14-1000,
15.12.14-4000,19.3.15-9000) and the assessee is individual so advance tax is to be find for AY 15-16
Dear Sir,
My Brother who works for Public Health Engineering Department, rajasthan and is a regular tax payer (TDS) has just received Intimation 143 (1) for AY 2013-14 with a demand of Rs 44,254/-.
Request to you to please guide me as to what is to be done against this intimation.
Request to you to please revert at earliest.
Regard,
Ghanshyam Singh Saini
9414741624
How to Interest Charged U/Sec 234 ABC i.e. 3765,4533,2186 (10930 & 10484) Total Tax Payable-218629
Dear Sir,
i pay tax on my business income for A.Y. 2014-2015 for Rs. 90000/- dt. 13.03.2014 on the total income 755380/-
i got a notice from CPC Department, Demand raised under section 1431 a i think it is against interest u/s 234 a,b,c for amount 10660/- how i can resolve this problam.
Please suggest me the best option for it
In case of Female Sr Citizen, If the total tax payble is 9907/-, the TDS on deposit by bank is @2000/- and rest of tax is not paid. Then what will be applicable section of 234 and what will be intrest to be paid.
Thanks in advance for reply.
are you aware of the circular issued by CBDT to CPC regarding software rectification for calculation of section 234A interest?
circular no 2/2015 dated 10th feb 2015?
suggest you update your readers with the intent and content of the said circular
Tax Payble for AY 2015-16 Rs. 16,981.00 but total Tax Paid up to March 2015 Rs. 9,000.00 through TDS and Balance will be deposited in April 2015. What is the Interest, Penalty etc. for late deposited Tax.
Waiting for your early response.
234B & 234C INTEREST CALCULATION PERCENTAGE DETAILS. HELP ME.
Income Tax return of one of colleague not submitted for the assessment Year 2012-13 and 2013-14. But in both year he has no tax liability as TDS amount properly deducted by employer. What is to be done for return submission and what will be penalty.
sir,i am a government servant(teacher).for AY2014-15my total income tax which is calculated according form 16 is 25987.i deposite 25990 as TDS (18000 upto feb 14+7990 in march)and submitted return online on 29 july 14 .now i got an intimation/notice u/s 143(1) to pay 29280(25990+3290) as interest u/s 234(b) &234(c).sir, piz,.guide me what ihave to do now.waiting for your suggestion soon. with regard s.k.gupta
Sir l am a gov servant(Teacher). For AY 2014-15 my total tax which is calculated according to form 16 is Rs.18814. Rs.11,000/- deducted from my salary on monthly basis (Rs.1000/- per month. The remaining amount of Rs.7814/- was deducted by TDS in march-14. I submitted my return online. Now I get an intimation u/s 143(1) to pay Rs.21129 (18754+2375 as interest u/s 234b(Rs.1683/-) & 234c(Rs.692/-)). Sir pls guide me what l have to do now
Dear Sir,
I was working in M/s SPANCO in FY 2012-13, SPANCO deduct TDS from monthly salary total 49407 Rs but they have not deposit the amount to income tax department, and I am not getting Form-16 from SPANCO. On 10th July-13 I resign from SPANCO. Still SPANCO has been not deposit FY 2012-13 TDS to IT Department. Then I met with Commissioner of Income Tax, Mumbai on 26th Sep-14 and submit all suitable document. He suggest to wait for 2 -3 months and then please file IT return FY 2012-13 with out paying from pocket and with out Form-16. I am doing the same. I got notice 49407 + 13197 (Interest) = 62600 Rs liability against my PAN card on 22nd Jul’14. Please suggest how I will get relief from it.
One thing very much clear from this occurrence ” Honesty is the worst policy in our country” If I will not inform to IT Department and I will not file any IT return, then at least this liability currently not with me. I am facing problem due to I am an Honest common man.
Please suggest how I will get relief from it.
Thanks
Avijit Saha
Sir l am a gov servant.For AY 2014-15 my total tax which is calculated according form 16 is rs.17799.I deposit 17800 asTDS in march 2014.I submitted return online. Now I get an intimation u/s 143(1) to pay Rs.19870(17799+2071as interest u/s 234b&234c)Sir pls guide me what l have to do now ?
respected Sir,
I’m a Rajasthan govt employee. For the A.Y.2014-15, my tax liability including cess calculated Rs 45491/. A sum of Rs 45500/ has been deducted from my monthly salary as TDS before 31st Mar’14.Online return was submitted before due date.
Today I received an intimation u/s 143(1) of IT act showing net amt payable Rs 50800/-(Income tax Rs 45491+intt u/s 234B Rs 3632+ intt u/s 234C Rs 1680).
Pl guide , what is my fault ? What remadies/reliefs available to me ?
With regarads.
I am govt salaried employee and TDS of Rs. 294559 was deducted from my salary before 31.03.2014. While filing return I was to calculate I Tax on Income from other Source i.e. Bank Interest of Rs. 80556 and while filing e-return I was assessed to pay Income tax of Rs. 307144 plus cess 9214 besides Interest u/s 234B and 234C (total 1237) and accordingly paid.The total tax paid came to Rs. 317599. Now I have received Demand intimation u/s 143(1)to the effect that New amount payable as computed u/s 143(1) is Rs. 324000. Please clarify whether I have committed any mistake while calculating tax at the time of e-filing, if so, detail the same.
sir i will pay incometax in feb 2014 but i cant fillup return i want to fill it what can i do /
sir I hv been asked to pay the amount 34000. which is found short with their computer calculaion amount for the year 2013-14.being a govt employee my ddo has deducted the said amount in form 16a.how can I paid which I hv akready paid.2).under section 234 b and c I hv been asked to pay 5490 on default of advance tax payment.please sir guide me wt should I do.i dhall b very thank ful to you…..Regards. …Dr.Jasbinder Kapoor kullu (H.P)
Dear Sir,
My Father who works for railways and is a regular tax payer (TDS) has just received Intimation 143 (1) for AY 2013-14 with a demand of Rs 64639/-. After inquiring he come to know that his Form 16 is reflecting a wrong PAN due to which this demand has come.
Request to you to please guide me as to what is to be done against this intimation.
Request to you to please revert at earliest.
Regards,
Vishal Saxena
If self assessment taxes paid after 31.03.2014 but before 31.07.2014 & return file after 31.07.2014 for the assessment year 2014-15 for salary & other income class. Inerest u/s 234a applicable from 31.07.2014 on self assessment tax amount till date of return filing or nil 234a interest charged by income tax,please guide us
Demmand for rs 80/- has been raised under section 234A,as the Return 2013-14 was online submitted in march 2014 as against last date 05 aug 2013.Self assessment tax was paid by me before March 2013.please advise me whether this demand undersection 234A is justified or not
Return for AY 2013-14 was online submitted in march 2014.,due to late submission of Return,Interest of RS 80/-,under section 234A has been demanded by income tax office. Self assessment tax was paid well in time i.e.before march2013.Please advise the demand raised by incometax office is correct ?
D K GOYAL, my email id is- [email protected]
Sir,
Whether this provisions applicable to senior citizens also
Hi, I am a central government employee. when I am filling online return it is automatically showing some amount in Total interest u/s 234B and 234C. The tax has been deducted by employer before 31st Mar 2014. Then why amount is shown in said fields? Thanks.
I am a State government employee. while filing online return as per form 16 provided by my employer in the column u/s 234B & u/s 234C showing some intrest amount . All the income tax is deducted from my salary befor March 2014.
so kindly help me.
thanks in advance. – See more at: https://taxguru.in/income-tax/section-234a-234b-234c-income-tax-act-1961.html#sthash.a337LU4j.dpuf
Capital gain computed on the basis of stamp valuation applying u/s. 50C. Assessee is liable to interest u/s. 234B and 234C.
Kindly give me the suggestion in this issue.
I am waiting your reply
i am a central government employee. while filling online return as per form 16 provided by my employer in the column u/s 234B & u/s 234C showing intrest amount of 770 & 836 respectively. all the income tax is deducted from my salary befor feb 2014.
so kindly help me.
thanks in advance.
Dear Ravinder ji
In order to calculate 90% of assessed tax paid both advance tax & TDS are to be considered.
so u should consider both advance tax and tds
Dear Ravinder ji
In order to calculate 90% of assessed tax paid both advance tax & TDS are to be considered.
Hi, I need help with tax filing and have couple of questions regarding 234B & 234C. Please contact me on 9810410054. Regards…..
Hi there, I have paid complete tax before 31 march,2014. But when I am filing return for Assessment year 2014-15 there is some amount which comes up auto populated under section 234B and 234 C. Can anyone clarify?
The question is—what happens in cases where 90 per cent of the assessed tax is paid but on the basis of the Commission’s order under s. 245D(4) the advance tax paid turns out to be less than 90 per cent of the assessed tax as defined in the Explanation to s. 234B(1) ?
pls reply asap.
Dear Sir/Madam,
Do Senior citizens too need to pay Advance Tax?
Best regards, RAKESH
Dear Ravinderkumar Agarwal Please note that Int. u/s 234B is levied if we had not paid 90% of assessed tax and in calculation of assessed tax we already deduct TDS so if we add TDS to calculate the 90% criteria then it will mean Double benefit of TDS amount.
U/S 234 B INTEREST IS CALCULATED ON ASSESSED TAX AND REDUCED BY ADVANCE TAX PAID. AND ADVANCE TAX PAID IS MORE THAN 90% THEN NO INTEREST IS CHARGEABLE. MY QUESTION IS “WHY NOT TDS AMOUNT IS ALSO BEING DEDUCTED FOR CALCULATING TOTAL 90% TAX HAS BEEN PAID OR NOT. THUS IF TOTAL OF ADVANCE TAX AND TDS BOTH IS MORE THAN 90% OF TOTAL TAX DUE THEN NO INTEREST U/S 234 B SHOULD BE LEVIED. CAN YOU HELP GIVING ANSWERING WITH ANY DECIDED CASE DETAIL.
THANKS WAITIMG UR REPLY
I would like to know the calculation Interest u/s 234b & 234c ,for return u/s 148
I am salaried employ. However a fixed deposit in bank had earned an interest of about 20000/- and the bank deducted 10%+surcharge as tax and given form-16A for the same in April/ May of the following year. But they have uploaded only some portion of total interest as interest income paid but deposited full amount deducted. The remaining 20% dues of tax on interest income as computed by me were paid without any penalty thro’ challan in July – a few days before filing returns and filed the returns before the normal due date for filing returns i.e. 31stJul as per rules. These 20% dues on interest income which were paid after end of Financial year was about only 5% of the total dues for the corresponding Financial year. Still there was a demand notice under 234B & 234C, which I could not understand and got to know of it only after 3 years as the physical demand notice/ mail was not received earlier. What could be the reason for ITO’s demand notice? Do we have to pay penalty under 243B&C even for such meager interest income which is not even 5% of total salary income?
If it’s not so, can we say that the demand to individual tax payer is possibly due to delayed transfer of such TDS funds by employer to ITO. In such case shall we say it’s wrong application of rules by ITO for pay revision arrears received by an employee during 2nd half of financial year formed major portion of salary for that year.
in case of assessment year 2010-11 total tax payable1401686.advance tax of rs10000 was paid on06/01/2010.and self assment tax paid of rs214087 was paid on 09/08/2011. return submitted by efilling on31-03-2011. Pls tell me the the int u/s 234abc.and in what way.
i didnot file return from 2006-07 year
now i want to file my all return what panality will charge if i have no tax able income and no refund will claim (income is less then 160000).
reply at [email protected]
I have received a notice of Difference of Rs. 1600 relating to 234B Interest. I calculate using Winman Software. I don’t know the calculation method of the software. Could anyone please help me with this ?
U/S 234 B INTEREST IS CALCULATED ON ASSESSED TAX AND REDUCED BY ADVANCE TAX PAID. AND ADVANCE TAX PAID IS MORE THAN 90% THEN NO INTEREST IS CHARGEABLE. MY QUESTION IS “WHY NOT TDS AMOUNT IS ALSO BEING DEDUCTED FOR CALCULATING TOTAL 90% TAX HAS BEEN PAID OR NOT. THUS IF TOTAL OF ADVANCE TAX AND TDS BOTH IS MORE THAN 90% OF TOTAL TAX DUE THEN NO INTEREST U/S 234 B SHOULD BE LEVIED. CAN YOU HELP GIVING ANSWERING WITH ANY DECIDED CASE DETAIL.
THANKS WAITIMG UR REPLY