Is interest and penalty paid on late payment of tax allowed as deduction u/s 37?Is "interest received on refund", a taxable income?
Is interest and penalty paid on late payment of tax allowed as deduction u/s 37?Is "interest received on refund", a taxable income?
Dear Fatema,
Interest & Penalty paid under Income & wealth tax is disallowed..
Interest under anyother act is allowed as deduction..
Penalty under any other act is disallowed.
Interest on Refund is taxable as Other sources
interest received by assessee is taxed under section 244A. However interest and penalty paid cannot be allowed u/s37
Dear Fatema,
Interest & Penalty paid under Income & wealth tax is disallowed..
Basically allowable or not its depend upon whether it is levied on penalty in nature or compensatory in nature. Penalty in nature does not allow, while compensatory in nature are allowed.
Interest on Refund is taxable as Other sources.
Interest paid on income Tax or Wealth tax is not allowable.
But interest in compensatory nature will be allowed as a deduction.eg.Sales tax etc..
Penalty under any law will not be allowed as a deduction.
Interest on refund of Tax will be charged to tax under the head Income from Other Sources.
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