13 February 2016
Calculation of Interest under sec 234 B and 234 C after regular assessment where the income of the assessee has been increased. please provide excel.
14 February 2016
The calculation for short payment of tax is quite simple. this illustration is being given for an assessee who is a body corporate.
An corporate assessee is supposed to pay 25% of the tax due by 15th June, 50% by 15th September, 75% by 15th December and 100% by 15th March of the financial year. Any shortfall in the above advance payments would result in levy of interest under section 234 C.
Suppose the tax as per Return is Rs.1,20,000 of which Rs.20,000 is TDS and Rs.1,00,000 is Advance Tax paid. The installments have been paid correctly. However, the assessed tax is Rs.1,70,000 i.e Rs.1,50,000 ought to have been paid as Advance Tax whereas only Rs.1,00,000 has been paid. Hence there is a shortfall of Rs.50,000.
Interest under 234 C : 1st Installment 25% = Rs.37,500/- Paid Rs.25,000/- Shortfall Rs.12,500 x 1% x 3m = Rs. 375 2nd Installment 50%= Rs.75,000/- Paid Rs.50,000/- Shortfall Rs.25,000 x 1% x 3m = Rs. 750 3rd Installment 75%= Rs.112,500 Paid Rs. 75,000/- Shortfall Rs.37,500 x 1% x 3m = Rs.1,125 4th Installment 100%= Rs.150,000 Paid Rs.100,000 Shortfall Rs.50,000 x1% x 1m = Rs. 500 Total Interest under Section 234 C Rs.2,750/-
Interest under Section 234 B is payable if the Advance Tax / TDS paid is less than 905 of the assessed tax. In that case interest @ 1% per month or part thereof is levied on the shortfall from the 1st day of April of the assessment year till the date of completion of the assessment,
In this illustration suppose the ITR is for Assessment Year 2014-15. The enhanced assessment computing he tax payable at Rs.1,70,000 is completed on 4th February 2016. Since the tax paid Rs.1,20,000 is less than 90% of the assessed tax, interest under Section 234 B has to be paid. The tax short paid is Rs. 50,000. The period for which interest is payable is from 1st April 2014 to 4th February 2016 or 22 months and part of 23rd month. Hence Interest has to paid for 23 months which will work out as under:
Interest under Section 234 B: Rs.50,000 x 1% x 23 m = Rs.11,500/-
In case of non-corporate assessees there wuld be no difference in Interest under Section 234 B, but Advance Tax is payable in three installments only as 30% by 15th September, 60% by 15th December and 100% by 15th March. Hence interest payable under Section 234 C will be much lower.
I hope the detailed calculation will help you in creating your own Excel Worksheet.
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