Income tax interest
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
08 April 2015
Dear expert
one of my client (individual) has not paid any advance income tax. if his tax liability is RS. 86475 please tell me how to calculate interest and which section it will attract...
please reply...
one of my client (individual) has not paid any advance income tax. if his tax liability is RS. 86475 please tell me how to calculate interest and which section it will attract...
please reply...
08 April 2015
Sec 234 B & 234 B would apply. Since you have not paid any tax, straight away apply 7%(1% for months, i.e, the due date of paying Advance tax.) and 1.5& if you pay this month itself.
Section 234 B : Interest payable for default in payment of advance tax
An assessee who is liable to pay advance tax has failed to pay such tax or where the advance tax paid by such assessee is less than ninety per cent of the assessed tax, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or part of a month for period from the date on which the payment of advance tax became due on the amount of shortfall in the amount of advance tax paid.
In simple words, interest @ 1% per month is payable on the amount of income tax paid after the end of the financial year.
& Section 234 C : Interest payable for deferment of advance tax
Interest is payable @ 1% for 3 months on the amount of shortfall in payment of advance tax became due on 15th June (applicable only to Corporate assessees), 15th September (all assesses) and 15th December (all assessees) and interest @ 1% on the amount of shortfall in payment of advance tax became due on 15th March (all assessees).
Please note that in case of salaried employees, the advance tax liability is to be computed on the income other than salary income. TDS deducted by the employer is not to be adjusted against this liability.
Section 234 B : Interest payable for default in payment of advance tax
An assessee who is liable to pay advance tax has failed to pay such tax or where the advance tax paid by such assessee is less than ninety per cent of the assessed tax, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or part of a month for period from the date on which the payment of advance tax became due on the amount of shortfall in the amount of advance tax paid.
In simple words, interest @ 1% per month is payable on the amount of income tax paid after the end of the financial year.
& Section 234 C : Interest payable for deferment of advance tax
Interest is payable @ 1% for 3 months on the amount of shortfall in payment of advance tax became due on 15th June (applicable only to Corporate assessees), 15th September (all assesses) and 15th December (all assessees) and interest @ 1% on the amount of shortfall in payment of advance tax became due on 15th March (all assessees).
Please note that in case of salaried employees, the advance tax liability is to be computed on the income other than salary income. TDS deducted by the employer is not to be adjusted against this liability.
08 April 2015
Sec 234 B & 234 B would apply. Since you have not paid any tax, straight away apply 7%(1% for months, i.e, the due date of paying Advance tax.) and 1% if you pay this month itself.
Section 234 B : Interest payable for default in payment of advance tax
An assessee who is liable to pay advance tax has failed to pay such tax or where the advance tax paid by such assessee is less than ninety per cent of the assessed tax, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or part of a month for period from the date on which the payment of advance tax became due on the amount of shortfall in the amount of advance tax paid.
In simple words, interest @ 1% per month is payable on the amount of income tax paid after the end of the financial year.
& Section 234 C : Interest payable for deferment of advance tax
Interest is payable @ 1% for 3 months on the amount of shortfall in payment of advance tax became due on 15th June (applicable only to Corporate assessees), 15th September (all assesses) and 15th December (all assessees) and interest @ 1% on the amount of shortfall in payment of advance tax became due on 15th March (all assessees).
Please note that in case of salaried employees, the advance tax liability is to be computed on the income other than salary income. TDS deducted by the employer is not to be adjusted against this liability.
Section 234 B : Interest payable for default in payment of advance tax
An assessee who is liable to pay advance tax has failed to pay such tax or where the advance tax paid by such assessee is less than ninety per cent of the assessed tax, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or part of a month for period from the date on which the payment of advance tax became due on the amount of shortfall in the amount of advance tax paid.
In simple words, interest @ 1% per month is payable on the amount of income tax paid after the end of the financial year.
& Section 234 C : Interest payable for deferment of advance tax
Interest is payable @ 1% for 3 months on the amount of shortfall in payment of advance tax became due on 15th June (applicable only to Corporate assessees), 15th September (all assesses) and 15th December (all assessees) and interest @ 1% on the amount of shortfall in payment of advance tax became due on 15th March (all assessees).
Please note that in case of salaried employees, the advance tax liability is to be computed on the income other than salary income. TDS deducted by the employer is not to be adjusted against this liability.
Querist : Anonymous
Querist :
Anonymous
(Querist)
09 April 2015
Dear john sir
i ma bit confused to understand your reply i Request you to explain me the section 234B and 234C with an example if possible..
plzz.reply.it urgent...
i ma bit confused to understand your reply i Request you to explain me the section 234B and 234C with an example if possible..
plzz.reply.it urgent...
09 April 2015
If Tax payable is Rs. 10,000,:-
Then interest would be:-
Shortfall= Tax Payable- Adv Tax Paid= 10,000
234 B:-
1st Installment- Rs. 300 (10000 X 1% X 3months)
2nd Installemnt- Rs. 300 ((10000 X 1% X 3months)
3rd Installement- Rs. 100 (10000X 1% X 1 month since Fin Year ends)
Total:- Rs.700
234C- (Assumed that it would be paid in April Month itself) 1%- Rs.100-
Total: Rs. 800/-
Total
Then interest would be:-
Shortfall= Tax Payable- Adv Tax Paid= 10,000
234 B:-
1st Installment- Rs. 300 (10000 X 1% X 3months)
2nd Installemnt- Rs. 300 ((10000 X 1% X 3months)
3rd Installement- Rs. 100 (10000X 1% X 1 month since Fin Year ends)
Total:- Rs.700
234C- (Assumed that it would be paid in April Month itself) 1%- Rs.100-
Total: Rs. 800/-
Total
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- GST Audit whether Govt Companies are exempt?
- PTRC Show Cause Notice on Email
- Accounting treatment of AMC alongwith the purchase of Laptop
- Unable to File TDS Q2 Return – New TRACES Portal Error
- MSME disclosure and disallowance
- Taxation of crypto futures in India Fy 2026- 2027
- Not ordinarily resident having partnership income in India and salary in USA is any form to filed be
- GST Treatment of Purchases with GST Paid where Outward Supplies of Manufactured CattleFeed Exempt
- EPF ECR NEW RULES Sep 17th 2026
- Condonation Request sec 119(2) b -Enhancement Limit of Leave Exemption prior to AY 2023
- Expert Help Required for TDS Refund 100000 Through TRACES – AY 2022–23
- IMPORT PURCHASE ENTRY PASSED IN BOOKS OF ACCOUNT
- FAST DS 26 Undisclosed Foreign Asset Disclosure Scheme 2026
- Regime change
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- FAST-DS 2026 Under Tax Law - No recourse or support for person declaring via this scheme?
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
