penalty U/S 234 B
This query is : Resolved
08 July 2009
Dear Members,
My query is as under :
The salary income for the year AY 2009-10 is Rs. 43.00 lacs and interest income is Rs. 2.11 lacs. On salary income total tax deducted and paid is Rs. 13.00 lacs and on interest income which is from bank FD's the tds is Rs. 21,000. The total income tax payable is Rs. 13.72 lacs and after adjusting 13.21 already deducted as sum of Rs. 0.51 lacs is payable.
The query is whether 90% of assessed tax for the purpose of penalty u/s 234 B is to be taken for each heads of income or for the total income? Because if total income including salary and interest is taken, then there is no default, as the tax paid is well over 90%, however, if interest income is taken separately then the tax deducted falls short of 90% criterion.
The income tax software kitret deems there is a short fall in advance tax in the above example and calculates penalty u/s 234 b and c. Please clarify. Thanks.
My query is as under :
The salary income for the year AY 2009-10 is Rs. 43.00 lacs and interest income is Rs. 2.11 lacs. On salary income total tax deducted and paid is Rs. 13.00 lacs and on interest income which is from bank FD's the tds is Rs. 21,000. The total income tax payable is Rs. 13.72 lacs and after adjusting 13.21 already deducted as sum of Rs. 0.51 lacs is payable.
The query is whether 90% of assessed tax for the purpose of penalty u/s 234 B is to be taken for each heads of income or for the total income? Because if total income including salary and interest is taken, then there is no default, as the tax paid is well over 90%, however, if interest income is taken separately then the tax deducted falls short of 90% criterion.
The income tax software kitret deems there is a short fall in advance tax in the above example and calculates penalty u/s 234 b and c. Please clarify. Thanks.
08 July 2009
First of all Section 234 is for interest not for penalties.
Section 234B - Interest in payable if the amount of advance tax paid by the assessee is less than 90% of the assessed tax. Not applicable in your case as tax deducted is more than 90%.
Section 234B - Interest in payable if the amount of advance tax paid by the assessee is less than 90% of the assessed tax. Not applicable in your case as tax deducted is more than 90%.
08 July 2009
Section 234C - Interest is payable if an assessee has failed to pay advance tax or uderestaimated instalments of advance tax.
Applicable in your case as this section suppose to pay 100% tax.
Applicable in your case as this section suppose to pay 100% tax.
08 July 2009
Hi,
The interest u/s. 234B will be levied considering the total tax liability of the assessee and not headwise. The interest is payable on the amount after deducting TDS from the total tax payable . In your case the tax payable is 0.51 lacs after TDS and you have not paid any advance tax therefore the interest is payable on Rs. 0.51 lacs. As there is no advance tax paid by you and the tax payable after TDS exceeds Rs. 5000/- then you should have paid the advance tax upto 90% of this 0.51 lacs. Failure of which you are liable for interest u/s. 234B.
The interest u/s. 234B will be levied considering the total tax liability of the assessee and not headwise. The interest is payable on the amount after deducting TDS from the total tax payable . In your case the tax payable is 0.51 lacs after TDS and you have not paid any advance tax therefore the interest is payable on Rs. 0.51 lacs. As there is no advance tax paid by you and the tax payable after TDS exceeds Rs. 5000/- then you should have paid the advance tax upto 90% of this 0.51 lacs. Failure of which you are liable for interest u/s. 234B.
08 July 2009
In the cited issue section 234B and 234C will attract on the reasons well explained by Mr.Ratan.
09 July 2009
The issue is the tds deducted on salary plus interest aggregates to more than 90% of the total tax payable on the total income. The condition for 234B is that if the advance tax / tax paid is less tha 90% of the tax on the total assessed income then interest is attracted.
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