As we know, an income tax return is to be furnished within the prescribed time limit. In case of failure, the taxpayer will be liable to pay interest for delay in filing of an income tax return. Accordingly, such interest is payable as provisions of section 234A of the Income Tax Act, 1961.
Recently, while extending the due dates for filing of the income tax return for the Previous Year 2020-2021 (i.e., Assessment Year 2021-2022) interest provisions of section 234A are defined to be treated differently.
The present article briefly covers the provisions of section 234A along with the treatment as clarified vide circular no. 9 of 2021 dated 20th May 2021.
Interest is payable under section 234A under any of the following circumstances-
Thus, in nut-shell, interest for delay in filing of income tax return is payable as per provisions of section 234A.
As per section 234A(1), the defaulter will be liable to pay simple interest @1% per month or part thereof.
The amount on which interest is payable is defined hereunder-
|Particulars||Amount on which interest is payable|
|In case of regular assessment||Interest will be payable on the amount as formulated hereunder –
Amount of tax on the total income XXX
(-) Advance tax (XXX)
(-) TDS/TCS (XXX)
(-) Relief available under section 89/ 90/ 90A/ 91 (XXX)
(-) Tax credit claimed under section 115JAA/ 115JD (XXX)
Amount on which interest will be payable XXX
|In case of preliminary assessment under section 143(1)||Interest will be payable on the amount of tax on the total income as determined under section 143(1).|
Interest under section 234A will be payable for the following period-
|Particulars||Period for which interest is payable|
|When the return is furnished||From the date immediately following the due date till the date of filing of an income tax return.|
|When the return is not furnished||From the date immediately following the due date till the date of completion of the assessment under section 144.|
Vide circular no. 9 of 2021 dated 20th May 2021, the due date for furnishing of the income tax return is extended from 31st July 2021 to 30th September 2021 for non-audit taxpayers. However, the due date is extended from 31st October 2021 to 30th November 2021 in the case for taxpayers who require to get their books of accounts audited.
Interestingly, the said circular has come up with clarification 1 which defines the applicability of provisions of section 234A vis-à-vis extension of due date as detailed above. Clarification 1 is simplified hereunder-
|Particulars||Treatment to be given under section 234A|
|Cases, wherein, specified amount of tax exceeds INR 1 Lakhs||Due date extension as per circular no. 9 of 2021 will not be applicable to interest provisions. Accordingly, in case of delay in filing of the return, interest will be payable from 1st August 2021 (non-audit cases) or 1st November 2021 (audit cases).|
|Cases, wherein, specified amount of tax doesn’t exceed INR 1 Lakhs||Due date extension as per circular no. 9 of 2021 will also be applicable to the interest provisions. Accordingly, in case of delay in filing of the return, interest will be payable from 1st October 2021 (non-audit cases) or 1st December 2021 (audit cases).|