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Interest rate on income tax (Income Tax)

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This query is : Resolved


( Author )
09 August 2011

PLEASE TELL ME WHAT IS INTEREST RATE SLAB ON NON PAYMENT OF ADVANCE INCOME TAX.


B.Chackrapani Warrier

( Expert )
09 August 2011

This is covered under section 234 C of the referred act. Interest rate is 1% per month for three months for 1st and 2nd instalment's default and for the 3rd 1% for one month.


SUBHASH JAIN

( Author )
09 August 2011

SIR PLEASE CLEAR THAT I HOW TO CALCULATE THE INTEREST ON LATE AND NON PAYMENT OF INCOME TAX


CA PARAS BAFNA

( Expert )
09 August 2011

Take an example-

Suppose you were supposed to file your return on 31.7.2011. And further suppose that since you want to know about interest calculations U/s 234-A, 234-B and 234-C
you have not paid any advance tax or income tax. Fortunately Bank has deducted TDS of3000 on FDR Interest.
.
Your Tax payable is 18000/- and if you deduct TDS from this - 15000/- remains payable.

.
For delay in filing of return even for part of the month
Interest U/s 234-A
15000*1month* @1%=150
.
Tax payable 15000>10000 , You were liable to pay advance tax also.
.
234B and 234C comes into action.
.
234B becomes applicable from 1.4.2011
to 10.08.2011- As tomorrow or upto 31.08.2011 you will pay tax.
.
Int U/s 234B =15000*5month* @1%=750
.
Till here we have calculated Interest U/s 234A and 234B.
Period covered is after the end of the Previous Year.
.
Advance Tax is the tax , which is payable during the Previous year when Your tax liability exceeds 10000/-.
.
Interest U/s 234C:
Installments of15000:
1.15-09-2010 30% amount must be paid (4500)
.
2.15-12-2010 60% Total amt to be paid(9000)
.
3 15-03-2010 100% Whole amt to be paid(15000)
.
A. Since you have not paid Ist Installment
Interest @ 3% will be leviable on 4500.
(Interest upto 15-12-2011)
4500*3% = 135
(You may reduce from 4500 if you have paid
lesser, If you have paid 5000 here do not calculate Interest)

.
B. Since you have not paid IInd Installment Interest @ 3% will be leviable on 9000. (This is deemed upto 15-03-2011)
9000*3% = 270
(You may reduce from 9000 if you have paid
any amt. If you have paid 5000 here or in earlier quarter calculate Interest on4000 only)
.
C. Since you have not paid IIIRD or the last Installment Interest @ 1% will be leviable on 15000.
(This is deemed from 15-03-2011 to 31-3-2011)
15000*1% = 150
(You may reduce from 15000 if you have paid
any amt. If you have paid 5000 here and 5000 earlier calculate Interest on the balance5000 only)
.
Calculate Interest U/s 234C
135+270+150=555
.
You may find other examples in share files also. But the above may be helpful.



SUBHASH JAIN

( Author )
10 August 2011

A LOT OF THANKS FOR THE SERVING OF PRECIOUS

KNOWLEDGE.

LET ME KNOW ONE THING MORE THAT WHAT IS THE PRINCIPLE FOR ROUND OFF THE AMOUNT UNDER SECTION 234C


CA PARAS BAFNA

( Expert )
10 August 2011

Suppose 4994/- is the tax amount.
For calculating Interest
Round off to it to Rs 4900/-
Forget 94.
*
Whenever Interest U/s 234A 234B 234C you have to apply the above Rule.



SUBHASH JAIN

( Author )
11 August 2011

AND WHAT FOR LATE DEPOSIT OF T.D.S


B.Chackrapani Warrier

( Expert )
11 August 2011

For tds late payment ,interest rate is 1.50 % for every month or part of a month from the date of deduction to the date of payment.


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