Income-tax Act, 2025

Interest for defaults in furnishing return of income - Section 423

E.Interest chargeable in certain cases

Interest for defaults in furnishing return of income.

423. (1) Where the return of income for any tax year is furnished after the due date or is not furnished, the assessee shall be liable to pay simple interest as per the following formula:

I= 1% A T

where,

I = the interest payable;

A = the amount of tax on which interest is payable, as specified in sub-section (2);

T = number of months comprised in the period commencing on the date immediately following the starting date and ending on the end date, both specified in sub-section (2).

(2) For sub-section (1), in respect of the circumstances specified in column B of the Table below, the starting date shall be the date specified in column C, the ending date shall be the date as specified in column D and the amount of tax on which interest is payable is specified in column E:

TABLE

Sl. No.

Circumstances

Starting date

Ending date

The amount of tax on which interest is payable

A

B

C

D

E

1.

Where the return is furnished under section 263(1), (4) or (6) or in response to a notice under section 268(1) after the due date.

Due date for furnishing the return of income under section 263(1).

Date of furnishing of the return.

(a) Where a regular assessment is not made, tax on the total income as determined under section 270(1) as reduced by tax paid;

(b) Where a regular assessment is made, tax on the total income determined under regular assessment as reduced by tax paid.

2.

Where no return has been furnished under section 263(1), (4) or (6) or in response to a notice under section 268(1).

Due date for furnishing the return of income under section 263(1).

Date of completion of the assessment under section 271.

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