Interest u/s 243a, b & c

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

13 April 2012 we are partnership firm (PFAS) have filed the returns on:12.11.07 & been assessed for AY 2007-08 for total income of Rs.94,58,170/-and we have paid the tax as follows:-

14.09.06.....10,00,000.00
15.12.06.... 5,00,000.00
15.03.07..... 8,70,000.00
27.03.07..... 1,50,000.00
TDS ..... 1,23,868.00
24.10.07..... 6,09,828.00 ( Self ass Tax)
Total 32,53,696.00

But Dept has add Int U/s 234A . 10163.00
Int U/s 234B . 175197.00
Int U/s 234C 32290.00
Total 215216.00

can you confirm is the dept calicualtion is correct or they have charged more.

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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13 April 2012 Based on your income i think your firm is liable for tax audit under section 44AB so filing of return due date for such A.Y.2007-08 is 31st October 2007 for your case so first of all you are not liable for interest as per section 234A. But however you are liable for interest as per section 234B and 234C because due to the default and short payment of advance tax the interest computation is as follows:

I calculated based on the assumption of your total tax liability for such is Rs.32,53,696(including Surcharge and Education cess)

As per section 234B: 6,09,828 * 7% = Rs.42,688 for non payment of advance tax with in 31-3-2007 of such amount.

As per section 234C: Rs.18,935. I think the department calculated interest upto the date of issue of demand notice and also i think the self assessment tax paid by you doesn't credited to your account as per the department's record. Otherwise you are not liable for interest as per section 234A if you are liable for tax audit.

I here explaining how to compute interest as per section 234C: It would be compute and payable for the payment of insufficient instalments advance tax paid. the payment shedules is as follows:

30% of the total tax payable on or before 15 th September,

60% of the total tax payable on or before 15 th December,

100% of the total tax payable on or before 15 th March.

For non payment or short payment of advance tax interest would be charge @1%p.m or part of the month on short payment of advance tax paid than required by this section.

Here total tax payable means tax payable on total income - TDS or TCS if any.

Now analysis for your case:

For your case total tax payable as advance by you is Rs.31,29,828(35,53,696-1,23,868)

On that upto 15th September you have to pay advance tax of Rs.9,38,948 but you paid Rs.10,00,000 so excess paid so no interest would be charge.

Upto 15th December you have to pay advance tax of Rs.18,77,897 but you paid Rs.15,00,000 only i.e Rs.3,77,897 short paid and no other payment upto 15th March so you are liable for 3% interest on such short paid amount is Rs.11,337.

Upto 15th March you have to pay advance tax of Rs.31,29,828 but you paid Rs.23,70,00 ie.Rs 7,59,828 short paid so you are liable for 1% interest on such short paid amount is Rs.7,598.

So total Interest payable as per section 234C is Rs.18,935.

Interest as per section 234B would be payable on self assessment tax paid or payable as on 31st march(i.e. Short amount of advance tax paid as on 31st March than actual required) is @1% p.m or part of the month upto the date of payment of such tax
so for your case you are liable for interest under section 234B: 7% on 6,09,828 is Rs.42,688.

For your case i think TDS and Self assessment tax doesn't credit to your account as per the department's records for that it calculated the interest under section 234A,234B and 234C upto the date of issue of demand notice or upto the time period given to pay such amount.

I THINK ITS VERY LONG EXPLANATION BUT I EXPLAINED FOR YOUR CLARIFICATION IF YOU FEEL SORRY FORGET IT. I THINK ARE CLARIFIED OTHERWISE APPROACH ANY AUDITOR HE WILL CLARIFY YOU BASED ON THE NOTICE AND WHAT IS THE BASIS OF THE DEPERMENT'S CALCULATION AND HOW IT IS COMPUTED.

OM SAI SRI SAI JAI JAI SAI

Querist : Anonymous

Querist : Anonymous (Querist)

14 April 2012 Thanks for detailed reply and its more clear now.

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