234(B) Interest

This query is : Resolved

Pooja (Querist)
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25 May 2009 I have an additional liability to pay taxes for fy 2008-09. I want to know if I have to pay penalty under 234(b) for non payment of advance tax.

Some places I have read that if I pay the advance tax before filing my return by due date I dont have to pay the penalty ?

Some places mention as I hve not paid the advance tax by march 2009, I have to pay the interest u/s 234(b) @1% per month starting from April 2009 until I pay the advance tax ?

Pl help me understand

Jiwan singh

Jiwan singh (Expert)
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26 May 2009 you will have to pay simple interest @ 1% from 31.03.09 to when u file the return if u dont deposit Advance tax or u have paid advance tax & this tax is less than 90% of total asessed advance tax.

For more clearification please read READY RECKONER DR.vinod k singhania on page no. 275

CA.Tarun Maheshwari

CA.Tarun Maheshwari (Expert)
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26 May 2009 The second view is correct. You will have to pay the Interest u/s 234B. Mr.Jiwan has correctly explained the provision in this regard. I agree with his views.

CA PARVEEN GAMBHIR

CA PARVEEN GAMBHIR (Expert)
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26 May 2009 Assessee will be liable to pay interest u/s 234B, if an assessee who is liable to pay advance tax, has failed to pay or aadvance tax paid is less than 90% of assessed tax.

Interest Rate: @1% for every month or part of the month. Part of the month shall be treated as full month.

Period: From 1st April to the date of assessment u/s 143(1)or date of regular assessment.

Assessed Tax: Tax assessed u/s 143(1)or on regular assessment less advance tax paid, if any, TDS, TCS,etc. Credit shall also be given for taxes paid u/s 140A.

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