Organisation : Central Board of Direct Taxes (CBDT)
Facility Name : Interest Under Section 234A, 234B, 234C and 234D
Applicable States/UTs : All India
Website : https://incometaxindia.gov.in/Pages/faqs.aspx?k=FAQs+on+interest+under+section+234A,+234B,+234C+and+234D&c=5
What is Interest Under Section 234A, 234B, 234C and 234D?
Sections 234A, 234B, 234C, and 234D of the Indian Income Tax Act imposepenal interest on taxpayers for various defaults related to tax payment and return filing. The primary goal is to encourage timely compliance with tax obligations. Interest under section 234A shall be levied if the Income-tax return is furnished after the due date or is not furnished. Simple interest shall be charged at the rate of 1% per month or part thereof.
FAQ On Interest Under Section 234A, 234B, 234C and 234D
Frequently Asked Questions FAQ On Interest Under Section 234A, 234B, 234C and 234D
Which period shall be considered for interest under Section 234A if the return is furnished belatedly?
If the income-tax return is furnished after the due date specified in section 139(1), the interest shall be charged for the period commencing from the date immediately following the due date for filing of return of income and ending with the date on which the return of income is furnished.
The Circular No. 2/2015 [F.No.385/03/2015-IT(B)], dated 10-02-2015, has clarified that no interest under section 234A is chargeable on the amount of self-assessment tax paid by the assessee before the due date of filing of return of income.
Which period shall be considered for interest under Section 234A if the return is not furnished?
If the income-tax return is not furnished, interest shall be charged for the period commencing from the date immediately following the due date for filing of return of income and ending with the date on which the best judgment assessment is completed.
Which period shall be considered for interest under section 234A if the return is furnished belatedly in re-assessment?
Where return of income is required by a notice issued under section 148 (Income escaping assessment), but it is furnished after the expiry of the time allowed under such notice, the interest shall be charged for the period commencing from the day immediately following the expiry of the time allowed under the notice and ending on the date of furnishing of return.
Interest shall be charged on the amount by which the tax determined under re-assessment exceeds the tax determined as per the completed assessment.
Which period shall be considered for interest under Section 234A if the return is not furnished in re-assessment?
Where return of income is required by a notice issued under Section 148 (Income escaping assessment), but it is not furnished, the interest shall be charged for the period commencing from the day immediately following the expiry of the time allowed under the notice and ending on the date of completion of re-assessment.
Interest shall be charged on the amount by which the tax determined under re-assessment exceeds the tax determined as per the completed assessment.
Which period shall be considered for interest under Section 234A if the return is not furnished and an updated return is filed?
If the income-tax return is not furnished by the assessee and subsequently he files an updated return, interest shall be charged on the amount of self-assessment tax payable on the total income as declared in such updated return.
The interest shall be charged for the period commencing from the date immediately following the due date for filing the original return of income and ending with the date on which the updated return is furnished.
Which period shall be considered for interest under section 234A if the return is furnished and an updated return is also filed?
An assessee shall not be required to pay interest at the time of furnishing of the updated return if he has already filed the original return, revised return, or belated return for the relevant assessment year.
When is interest under Section 234B levied?
Interest under Section 234B shall be levied if the assessee has the liability to pay the advance tax, but he fails to pay the same or the amount paid as advance tax is less than 90% of the ‘assessed tax’.
What is the rate of interest that shall be charged under Section 234B?
Simple interest shall be charged at the rate of 1% per month or part thereof.
Which amount shall be considered to calculate interest under Section 234B if advance tax is not paid?
Where the assessee has the liability to pay the advance tax, but he failed to pay the same, the interest shall be charged on the whole amount of tax computed on his total income.
Which amount shall be taken to calculate interest under Section 234B if the advance tax paid is less than 90% of the assessed tax?
Where the advance tax paid by the assessee is less than 90% of the assessed tax, the interest shall be charged on the amount of assessed tax less advance tax paid.
If tax is paid on the basis of self-assessment under Section 140A, interest will be calculated on the amount by which advance tax paid falls short of assessed tax up to the date of payment of self-assessment tax, after that interest will be calculated on the amount by which aggregate of advance tax and self-assessment tax paid under Section 140A falls short of the assessed tax.