Interest Under Section 234A\B\C

CA Kumar Mukesh , Last updated: 29 December 2014
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We all are aware that when the section 234A\B\C, but only few of us are able to compute accurate Interest under these section.

The purpose of this article to cross verify the interest calculated by system against our manual workings. Some readers maythink that if the interest is calculated by system why we are again require to check. But let me tell, if you are regularly compare the Interest computed in Intimation under section 143(1) against return in some case you will find that demand is generated. However it has very low amount and most of us are not take it as seriously. This may be because difference in logics between our system and department system. But recently I have crossed verified the interest mentioned in Intimation and interest paid in Return, and I was stunned that in intimation contains wrong interest for more than Rs. 5,000.

Therefore, cross verification is necessary in all cases.

BUT HOW IT IS COMPUTED, LET SEE.

Suppose we have computed Total Income of a Company of Rs. 14, 20,000/- on which TDS of Rs. 50,000/- is deducted. Assessee has Mat credit of Rs. 70,000/-. The company has filled his return of Income on 31st January, 2015, due date 30th September, 2014. The Company also has paid advance taxes on the following dates

16th June, 2013 Rs 50,000/-

15th September, 2013 Rs 60,000/-

12th December, 2013 Rs 65,000/-

16th March, 2014 Rs 75,000/-

Now let see practical solution

Computation of Income Tax Liability at the filing of ROI
Total Income	1,420,000
Tax Payable on ROI	438,780
Less: TDS	50,000
Less: MAT Credit	70,000
Advance Tax Required to be paid	318,780
Less Advance Tax paid	250,000
Add: Interest under section
234A	2,748
234B	6,870
234C	5,793
Total Tax Liability	84,191
Round off under 288	84,190
Less: Self-Assessment Tax u/s 140A	84,190
Net Payable/Refundable	-

For 234A
Due Date	30-09-14
ROI Date	31-01-15
No of month	4
Tax Payable	68,700
Interest Payable	2,748

For 234B
Advance Tax Required to be paid	318,780
Advance Tax paid	250,000
Default %	78%
Interest Applicable	Yes
Start Date	01-04-14
End Date	31-01-15
No of month	10
Tax Payable	68,700
Interest Payable	6,870

For 234C
Due date	Date of Payment	Amount paid on before due date	% of Advance Tax Required	Advance tax required to be paid	Advance tax paid	Interest Required to be paid	Revised % of Tax	Amount of default	Interest
15-06-13	15-06-13	-	12%	38,253	-	Yes	15%	47,800	1,434
15-09-13	15-09-13	110,000	36%	114,760	110,000	Yes	45%	33,400	1,002
15-12-13	15-12-13	65,000	75%	239,085	175,000	Yes	75%	64,000	1,920
15-03-14	15-03-14	-	100%	318,780	175,000	Yes	100%	143,700	1,437
15-03-14	31-03-14	75,000	0%	-	-	No	0%	-	-
									5,793

Further, on 14th February, 2015 Intimation under section 143(1) which computes total Income of Rs. 15,50,000 and raise the demand of Rs. 81,740/- let see its correctness

Recompilation of Income Tax Liability as per Intimation under section 143(1)
Total Income	1,650,000
Tax payable on ROI	509,850
Less: TDS	50,000
Less: MAT Credit	70,000
Advance Tax Required to be paid	389,850
Less Advance Tax paid	250,000
Less: Self-Assessment Tax Paid u/s 140A	68,779
Add: Interest under section
234A	5,592
234B	14,690
234C	5,793
Less: Interest already paid	15,411
Total Tax Liability	81,735
Round off under 288	81,740
Less: Self-Assessment Tax	81,740
Net Payable/Refundable	-

For 234A (Revised)
Due Date	30-09-14
ROI Date	31-01-15
No of month	4
Tax Payable	139,800
Interest Payable	5,592

For 234B Revised
Advance Tax Required to be paid	389850
Advance Tax paid	250,000
Default %	64%
Interest Applicable	Yes
Start Date\ROI Date	01-04-14	31-01-15
End Date\Intimation Date	31-01-15	14-02-15
No of month	10	1
Tax Payable	139,800	71,000
Interest Payable	13,980	710