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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

Therefore, additional demand is corectly cumputed

Note: Interest under secton 234C is required to be calculated only once at the of filing of ROI

You can download the same file from the link /forum/interest-under-section-234a-b-c-315427.asp

Please make comment if have query or suggestion

Regards,

Kumar Mukesh

Mail Id: camukeshkumar@consultant.com


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Category Income Tax, Other Articles by - CA Kumar Mukesh 



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