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Address:- New Tax Route, 106, Dharma Palace, Begum Bridge Road, Meerut, Uttar Pradesh, 250002, Interest under Section 234A, 234B, and 234C of Income Tax Act, 1961, Section 44AB: Income Tax Audit Turnover Limit For AY 2020-21, Should The Last Date of ITR and Tax Audit Need to be Extended, Advance Tax Payment Due Date- Know the deadlines, Know the complete procedure and provision for advance tax payments, Section 40b of Income-tax Act- Remuneration and Interest paid to Partners, Incorporation of Limited Liability Partnership, Udyam Registration | MSME Registration Online, 15% of the tax due on the return income or the amount of such advance tax paid, Simple Interest @ 1% per month or part of the month for 3 months, 45% of the tax due on the return income or the amount of such advance tax paid, 75% of the tax due on the return income or the amount of such advance tax paid, 100% of the tax due on the return income or the amount of such advance tax paid, Simple Interest @ 1% per month or part of the month for 1 month. Choosing the best finanacial platform managing your taxes, We talk about Investment, Insurance, Tax planning, Stock market. The interest is taken till July because which is the due date of payment for individual assesese and assumed as month of return filing. This Standard identifies the circumstances in which these criteria will be met and, therefore, revenue will be recognised. 3. Section 234 C. Non-payment or short payment of individual installment or installments of advance tax (i.e., deferment of advance tax) But before we discuss the provisions of section 234 A/B/C, it’s important to understand the provisions of Rule 119A relating to computation of interest under the Act. If there is any shortfall, interest shall be levied @ 1% simple interest for 1 month or part of the month on the short amount. The borrower is required to invest the difference between the total acquisition cost (sales price, cost of any required repairs paid for by the borrower, and total closing costs to be paid by the borrower), and amount of the mortgage to be insured. I already have many blogs on diversified topics and also manages more than 10 pages on assorted subject matters. (Shortfall means difference between assessed tax and advance tax paid). Shortfall of Rs. Reduction or Waiver of Interest u/s 234A/234B/234C X X X X Extracts X X X X → Full Text of the Document. The Interest is taken from April to July because July is the due date month of return filing and here we assumed that assessee has filed its return in time. 30,000 (90,000 – 60,000), Interest Payable u/s 234B– 30000*1%* 4 Month (April to July)= 1200. Income Tax Mr. Kiyaan is an assessee whose income tax computed was Rs. Under this post, we will discuss Interest payable under section 234A/B/C of the Act. (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. For a principal residence, the borrower’s minimum downpayment (B)The interest shall be payable for the period commencing from the date im… Round off: 13,200: rounded off to nearest 100: Date of assessment order: 20 th January of the assessment year: April to January: 10 months: Interest u/s 234B (13200*1%*10) 1,320 If the advance tax paid is less than actual advance tax instalments or if it is not paid at all, then in such case, interest penalty gets attracted u/s 234C. 234A, 234B and 234C dealing with interest levied for (i) delay in filing the return of income; (ii) non-payment or short payment of advance tax; and (iii) non-payment or short payment of individual instalment or instalments of advance tax (i.e., deferment of advance tax). Since advance for the financial year is less than 90% of the assessed tax, The person is liable to pay interest under section 234B of Income tax act @ 1% simple interest. The interest is taken till July because which is the due date of payment for individual assesese and assumed as month of return filing. Note: Advance Tax – It means you will be required to pay your tax based on the due dates given under the Income Tax Act. Tony John, You can also submit your article by sending to article@caclubindia.com, GST certification Professional Course, India's largest network for finance professionals, Recent Changes in GST Rules - Impact and Actions needed, CBIC Issues 3 Important GST Notifications related to Penalty, Late Filing, and CGST Fourteenth Amendment Rules, 2020, Important Changes Introduced in CGST (Fourteenth Amendment) Rules 2020, Default in filing of tax returns – Section 234A, Default in payment of Advance Tax – Section 234B. This is how interest is calculated: 1% p.m. for a period of 3 months for every deferment. For the Interest calculation under section 234C, we can understand it with an example. 85000 payable as the net advance tax … Tip to save Interest under section 234B – Pay at least 90% of your expected tax liability after TDS before 31st March. The government clearly states that if an individual earns a certain amount of income in a year, he needs to pay the income tax. Deferred payment of Advance Tax – Section 234C. Also Read- Section 40b of Income-tax Act- Remuneration and Interest paid to Partners, Total Interest Liability u/s 234C= Rs. For making default in furnishing the IT return, Interest U/s Section 234B – For making default in payment of advance tax, Interest U/s Section 234C – For deferment of advance tax, Time intervals for payment of advance tax are as follows etc. Advance tax payment details are as follows: Interest u/s 234B is calculated as follows: 90% of assessed tax = 250000*90% = 225000. Interest under section 234 B = 115000*1%*4 months (Apr-July) = Rs.4600, Interest under section 234C – Deferment of Advance tax. (Updated till June 2018). Section 139(1) specifies due dates for filing voluntary returns of a company, a person (other than a company), or any other assessee. It is calculated from the due date to date of furnishing the return. Interest u/s 234A is calculated @ 1% for every month or part of the month on the amount of tax payable. 212/495/92-IT(A-II)], dated 2-5-1994. Your email address will not be published. ; The interest is calculated on the difference between the amount arrived after applying the specified percentage of tax on returned income and the actual tax paid by the due dates. AY 2017-18, The taxpayers who opted for presumptive income taxation e.g. Income tax Act specifies certain time limits for filing Income tax returns to all the Assessee. 20000. Also Read: Penal Interest Imposed Under Section 234B. Also Read:- Know the complete procedure and provision for advance tax payments. Under Income Tax, different types of Interest are levied for various kinds of delays/default. Interest Penalty under Sections 234A, 234B & 234C Paying taxes and filing Income Tax Returns are not mandatory but they surely are the responsibility of every Indian citizen. Now check 90% of balance tax liability, in our case it is 1,00,000*90%= 90,000. Interest under section 234C will be calculated on the basis of the difference between the advance tax paid and due. Assessed Tax- Rs. 4,80,000 (6,00,000-1,20,000). Professional Course, GST Annual Return Interest under section 234B is levied from the first day of the assessment year, i.e., from 1st April till the date of determination of income under section 143 (1) or when a regular assessment is made, then till the date of such a regular assessment. Section 234 B. Non-payment or short payment of advance tax. For the Interest calculation under section 234A, we can understand it with an example. ***SECTION 234C – Default in payment of advance tax on due date***. 16,440/-. The interest is calculated on the difference between the amount arrived after applying the specified percentage of tax on returned income and the actual tax paid by the due dates. Here the time limit prescribed means the time limits mentioned under section 139(1) i.e. Understand the calculation of interest u/s 234 A, B & C of the Income Tax Act. No interest shall be charged u/s 234C for first 2 installments if the company pays advance tax @12% & 36% of the advance tax payable for the year. In both, the above cases the interest will be charged @ 1% for every month or part of the month, from 1st April to the month of return filing. Are you running late in filing your income tax return? Professional Course, Online Excel Course However, no Interest u/s 234 A shall be charged where the tax payable is “NIL” or refund is available for the Assessee. Disclaimer: The information contained in the above article are solely for informational purpose after exercising due care. 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. 6,00,000. Interest under section 234C – Deferment of Advance tax . Please do post your comments. In case the assessee fails to comply with the provisions of the Act, interest shall be chargeable under Sections 234A, 234B and 234C. Interest under section 234C- … Non-corporate assessee: As a result several tax payers faced … This article aims to give clarity on the computation of Interest under the above-mentioned sections. 60000. The Interest calculation will be as follow-, Delay in filing of Return- From 31st July to 2nd December i.e 5 Months. I have more than 5+ years of acetic and delightful experience in Blogging and writing on more than 100+ topics in English and Hindi both. Know all about interest under section 234A, 234B and 234C for late e-Filing of your Income Tax return. However, it does not constitute professional advice or a formal recommendation. Interest under section 234A- 2,00,000*1%*5= Rs. If the advance tax paid is in underestimated instalments or if it s not paid at all, Section 234C gets attracted. I started my blog as my dream project to help others to get knowledge with my content. The same is given as under-. Give Feedback/Suggestion- Hope you all find it useful, please give your valuable feedback & let us know if there is an error. Delay in filing of Tax Returns – Section 234A. Suppose the tax payable by the company is Rs.100000. 120000, while TDS due was Rs. However, no advance tax is required to paid where tax to be paid is less than Rs. Suppose Mr. X had Rs. There are 3 different Interest payable under section 234 of the Income Tax Act. Interest will be calculated as follows: Interest under section 234B- Default in payment of Advance Tax: If an assessee has to pay advance tax and he has not paid such tax or if the advance tax paid by him is less than 90% of the assessed tax, he shall pay simple interest @ 1% every month or part of a month. The total interest due under section 234B will be: Rs 60,000 * 1%* 4 months (April-July) = Rs 2,400. For Income Tax Return late filing, Advance tax delayed payment and for short-payment of advance tax, there is Interest payable by the assessee, which is chargeable u/s 234A, u/s 234B, and u/s 234C respectively of Income Tax Act. It is calculated from April 1st of the next financial year to date of determination of total income under Section 143(1). The total interest due under section 234B will be: Rs 60,000 * 1%* 4 months (April-July) = Rs 2,400. The Learned Assessing Officer completed the Assessment under Section 143(1) of the Income-tax Act, 1961, and made demand for interest under Section 234B and Section 234C of the Income-tax Act, 1961. The penal interest under Section 234B is calculated separately from the interest under Section 234C. Interest is calculated on the difference between the instalment paid and instalment payable. Here is brief overview of the sections to be discussed in detail: Interest under section 234A – Default in furnishing the return of Income: If the assessee has not filed his return of income within the time limit prescribed, he shall pay simple interest @ 1% for every month or part of a month. They can also pay the entire amount by 31st March. Here it is important to note that – if the payment of the tax due is on account of –. But, if regular assessment u/s. Also Read:- Advance Tax Payment Due Date- Know the deadlines. The same is given as under-. 31st July in case of Individuals / HUF and 30th of September in all other cases. This penal interest u/s 234B is calculated separately from interest levied under section 234C. But, for the last installment on 15th March, interest would be 1% for 1 month only. Other Articles by - Section 234B deals with following two cases-, A) When the taxpayer has failed to pay advance tax though he is liable to pay advance tax, B) Where the advance tax paid by the taxpayer is less than 90% of the assessed tax, Here assessed tax means Total Tax Liability -TDS (if any). Section 234C: Deferred Payment of Advance Tax. 10,000 or you’re senior citizen (not having any income from business or profession). Section 234C deals with the delay payment of advance tax installments. Interest is calculated on the difference between the installment paid and installment payable. In its few uses as a bomber it proved to be nearly impossible to intercept. We also assist you in tax compliance and filing of various forms with the help of a team of experts. The Penalty for Advance Tax delay in payment is levied under section 234C. Tony John  Mr. Kiyaan has failed to file his Income Tax Return on which the tax payable was Rs. Section 234B and 234C deals with provisions related to interest payable for defaults in payment of advance tax and deferment of advance tax respectively. Circular of the CBDT, dated 23-5-1996, had been issued for the purpose of waiver of interest leviable under sections 234A, 234B and 234C. The Act inter alia requires that Income tax returns be filed in time, advance tax is paid correctly and within the time prescribed under the act. The due date was 31st July 2019 and he submits its Income Tax Return on 2nd December 2019. Apart from gaining knowledge through our articles section, we work as your virtual assistant by providing useful links for payment of taxes and for sites and various forms in excel and pdf format. Interest under section 234 B = 115000*1%*4 months (Apr-July) = Rs.4600. Conclusion: Apparently even though it seems to be similar factors for calculating the interest u/s 234B and 234C there are differences in factors that are to be taken for calculating referred interests such as Assessed Tax vs Tax on Returned Income, Tax Deducted vs Tax Deductible which will impact on outcome of interest amount. It is an information-sharing platform where our team of authors, writers, tax experts make an article on various topics for the purpose of educating the users about the taxation system in India. A company files its return on 10th December. Revenue is recognised when it is probable that future economic benefits will flow to the entity and these benefits can be measured reliably. Before we talk about Section 234C, we need to talk about the due dates of payment of advance tax. Income tax act is the charging statute of income tax in India. Apart from that, there are two more types of interests under section 234. However, no interest will be charged if the advance tax paid by the assessee on the current income, on or before the 15th of June and before the 15th of September is not less than 12% or 36% respectively of the tax due on the returned income, then the assessee shall not be liable to pay any interest on the amount of the shortfall on those dates. Section 44AD, Section 44ADA, Section 44AE have to pay the whole advance tax liability in one installment (100%) on or before 15th March. Interest under section 234A- Delay in Filing of Income Tax Return. Therefore, she is liable to pay interest under Section 234B. 3 months for every Deferment advance, Compiled by- CA Chirag Agarwal ( Practicing Chartered Accountants ), i a... The primary issue in accounting for revenue difference between 234b and 234c recognised when it is 1,00,000 90. [ email protected ] downpayment interest under section 234B the calculation of interest are levied for kinds. 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