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Waiver of interest u/s 234B and 234C of Income Tax Act on delay in deposit of advance tax/self-assessment (SA) tax on MEIS/RODTEP for the A.Y. 2021-22


Exports of notified goods/products with ITC[HS] code, shall be rewarded under MEIS. Appendix 3B lists the rate(s) of rewards on various notified products [ITC (HS) code wise].

We would like to bring to your kind attention that, for the period 2020-21, DGFT portal through which these incentives scrips are applied and issued was closed by the Govt. from the beginning of financial year 20-21 i.e. 01.04.2020.

2. In order to present true and fair view of financial statements and to maintain consistency in GP/NP ratio of the enterprise, Income should be shown on accrual basis.

Further, the compliance of ICDS is compulsory u/s 145 of Income Tax Act and the Relevant provisions of relevant ICDS are being explained herewith:

ICDS-I Accounting Policies

  • Fundamental Accounting Assumptions: All the three fundamental accounting assumptions of Going Concern, Consistency and Accrual are same as those mentioned in AS-1.
  • As per ICDS-I (Considerations in the Selection and Change of Accounting Policies), an accounting policy shall not be changed without reasonable cause.

Waiver of Section 234B & 234C interest for delay in deposit of Advance-SA tax

ICDS-VII (Recognition of Government Grants)

(a) DEFINITION: 3(1) The following terms are used in the Income Computation and Disclosure Standard with the meanings specified:

(b) “Government grants” are assistance by Government in cash or kind to a person for past or future compliance with certain conditions. They exclude those forms of Government assistance which cannot have a value placed upon them and the transactions with Government which cannot be distinguished from the normal trading transactions of the person.

(c) Government grants should not be recognised until there is reasonable assurance that (i) the person shall comply with the conditions attached to them, and (ii) the grants shall be received

(d) Recognition of Government grant shall not be postponed beyond the date of actual receipt.

3. MEIS portal was reopened on 24 September, 2021 and started generation of Scrips. All balance sheets audited and signed after this date should show income from MEIS on accrual basis since it has been generated or started to be generated on DGFT portal.

Relevant provisions of As-4 (Contingencies and Events Occurring After the Balance Sheet Date) are being reproduced herewith which makes t obligatory to consider events after balance sheet date for preparation of financial statements.

“Adjustments to assets and liabilities are required for events occurring after the balance sheet date that provide additional information materially affecting the determination of the amounts relating to conditions existing at the balance sheet date. For example, an adjustment may be made for a loss on a trade receivable account which is confirmed by the insolvency of a customer which occurs after the balance sheet date.”

4. It is further submitted that for the period from 1st January 2021 to 31st March 2021, in lieu of MEIS scheme, new scheme of export incentives namely RoDTEP was announced by Govt. vide Press release dated 31 December 2020.However, incentive rates under RODTEP scheme were notified 17 August 2021 and consequential issuances of scrips were made on 11 October 2021.


In view of above, if assessee does not show income accrued in its income tax return, then Assessing Officer can make an addition to the income and will levy penalty u/s 270A along with interest of 234B and 234C, since the reasonable assurance of generation of scrips of MEIS/RODTEP is confirmed or assessee need to prove the department reasons for not considering the income on accrual basis.

As shown above, to comply with provisions under ICDS/AS, Assessee needs to show income on accrual basis and avoid any litigation.

6. In our opinion, since the MEIS/ RODTEP scrip could not be generated-sold, so, no interest u/s 234b and 234C should be charged for non-payment of advance tax and self -assessment tax for AY 2021-22 on the amount of MEIS/RODTEP outstanding in the balance sheet as at 31.03.2021.

All Exporters liable to pay tax u/s 234b and 234C may approach CBDT u/s 119 of Income Tax Act for waiver the interest u/s 234B and 234C and may not pay the tax while filing the ITRs.

7. All assesses who are opting to pay tax on MEIS/RODTEP are more compliant than to those who are postponing the income to the year of actual receipt. Revenue should accept Assesseees’ request u/s 119 for waiver of interest as a goodwill gesture for strict compliance of law by such assessees.


Disclaimer : The information in this article is true and complete to the best of our knowledge. All suggestions/opinion are made without any guarantee on the part of author. The author disclaims any liability in connection with the use of these suggestions/opinions.

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June 2024