Difference between interest & penalty

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

14 December 2012 Can any one please confirm this?
1.Interest arises when there is late payment.
2.Penalty arises when there is late filing of return.
Please correct me if I am wrong.

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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14 December 2012 Penalty is levied for somthing wrong you have done or what you should have done but could not do so and interest is charged to compensate for late payment etc.
Interest is charged to compensate for time value of money.
Interest is charged at the specified percentage and can not be fixed but penalty can be in absolute as well as in percentage terms..

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@VaibhavJ

@VaibhavJ (Expert)
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14 December 2012 agreed with expert..

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