1.- CONDITIONS FOR LEVY OF INTEREST u/s 234A
a) Where Return of Income (ITR) is not furnished by Assessee.
b) Where Return of Income (ITR) is furnished by assessee after Due Date of furnishing Return specified u/s 139(1).
2.- RATE OF INTEREST
>1% per month or part of month.
(Part of month means Interest for whole month is charged @1% even if the default is for 1 day)
3.- AMOUNT ON WHICH INTEREST u/s 234 A IS COMPUTED
|Total Tax Liability||XXX|
|Relief u/s 89(1)||XX|
|Relief u/s 90/91||XX|
|NET TAX LIABILITY||XXX|
4.- CHARACTERISTICS OF INTEREST U/S 234A
>Interest u/s 234A is mandatory in nature which can only be waived off by chief Commissioner of Income Tax (CCIT) or Direct General of Income Tax (DG).
>If the amount of self assessment tax paid by assessee fall short of the amount required to be paid u/s 140A as self assessment tax.
Then the amount so paid shall be first adjusted towards Interest and balance towards Income Tax.
Suppose an individual furnish his ITR on 1st Sept.2015 and the due date of filing is 31st July,2015.
Income from salary = Rs 3,50,000
Tax Payable by Individual = Rs 10,000
TDS deducted on salary = Rs 2,000
Then, Interest required to be paid by such individual u/s 234A is:
Period of default = 2 months (August/September)
Rate of Interest = 1%
Amount of Interest = (10,000-2,000)1%*2 months
= Rs 160
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