Any assessee who has tax payable and don’t file his/her Income Tax Return within the due date specified u/s 139(1) is liable to pay interest u/s 234A.

Meaning of Due Date U/s 139(1)

  • Non Audit Cases : 31st July
  • Audit Cases : 31st Oct,

Due to Covid 19 CBDT on 24th June 2020 extended the due dates for filing of Income Tax Return up to 30th Nov 2020 (For Both Audit and Non Audit Cases) wide Notification No.35 /2020/ F. No. 370142/23/2020-TPL.

Thereafter on 24th Oct 2020, CBDT further extended due dates to 31st Dec 2020(Non Audit) and 31st Jan 2021(Audit Case).

Thereafter on 30th Dec 2020, CBDT further extended due dates to 10th Jan 2021(Non Audit) and 15th Feb 2021(Audit Case)

Tax Payable = Tax On Total Income-TDS & Relief U/s 89/90/90A

So clear reading of section 234A with 139(1), an assessee is liable to pay interest u/s 234A if:

  • he has tax payable and
  • he don’t file his/her Income Tax Return up to 10th Jan 2021(Non Audit Case) or 15th Feb 2021(Audit Cases)
However As per Notification No. 35 /2020/ F. No. 370142/23/2020-TP if assessee has tax payable exceeding Rs. 1,00,000 then for the purpose of Section 234A due date extension is not applicable on him and Interest will be charged from 1st Aug 2020(Non Audit Cases) or 1st Nov 2020(Audit Cases) as the case may be but he can file his return up to 10 Jan 2021 or 15th Feb 2021.

Note : Interest will be charged up to date of filing of return

Note : If assessee pay all outstanding tax demand after the due date but don’t file the return : In such case assessee will be liable to pay interest u/s 234A on tax payable till the date of filing the return 

For better understanding let’s take some illustrations

Tax On Total Income  = 91347

Relief U/s  89/90/90A = 2500

TDS = 150

Date Of Filing of Return  = 12/01/2021

INTEREST U/S 234A :

Amount on which interest to be calculated : 91347-2500-150 = 88697

Period 11th Jan To 12th Jan 2021 i.e. one month

Conclusion  for point 1: Since Tax Payable Rs 88697 is less than Rs 100000 so interest will be charged from  Next Day of the due date i.e. 11th Jan

Tax On Total Income  = 241021

Relief U/s  89/90/90A = 15000

TDS = 25000

Date Of Filing of Return = 12/01/2021

INTEREST U/S 234A :

Amount on which interest to be calculated : 241021-15000-25000 = 201021

Period 1ST Aug 2020 To 12th Jan 2021 i.e. 6 month

Conclusion for point 2 : Since Tax Payable Rs 2,01,021 is more than Rs 1,00,000 So As per Notification No.35 /2020/ F. No. 370142/23/2020-TP due date for calculating Interest U/s 234A will be  31st July so in this case interest will be charged from  the Next Day of the original due date i.e. from 1st Aug 2020

Tax On Total Income  = 241021

Relief U/s 89/90/90A = 15000

TDS = 25000

Date Of Filing of Return = 12/01/2021

Self-Assessment Tax Paid On 01st Aug 2020 = 203027

INTEREST U/S 234A :

Amount on which interest to be calculated : 241021-15000-25000 = 201021*

Period 1ST Aug 2020 To 12th Jan 2021 i.e. 6 month

* Tax Paid after due date is not consider for the purpose of calculating interest u/s 234A

Conclusion for point 3 : Since Tax Payable Rs 201021 is more than Rs 100000 So As per Notification No. 35/2020/ F. No. 370142/23/2020-TP due date for calculating Interest U/s 234A will be 31st July so in this case interest will be charged from  the Next Day of the original due date i.e. . from 1st Aug 2020

Conclusion :

CASE I : TAX PAYABLE DOES NOT EXCEED RS 100000 CASE II : TAX PAYABLE DOES EXCEED RS 100000
 

INTEREST WILL BE CHARGED FROM 11TH JAN 2021 OR 16TH FEB 2021 AS THE CASE MAY BE TO DATE OF FILING OF RETURN

 

INTEREST WILL BE CHARGED FROM 1ST AUG 2020 OR 1ST NOV 2020 AS THE CASE MAY BE TO DATE OF FILING OF RETURN

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One Comment

  1. Rajiv Gupta says:

    I have filed my return on 7th jan 21. Total tax was 232577 lacs and after TDS and advance tax payment the balance tax payable on 1 july 2020 was 14860. but xls scema calculated interest as 4211/- which I had to pay. According to this article this interest is wrong. can I do somthing now

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