REGARDING INTEREST ACCRUED ON OUTSTANDING DEMAND
This query is : Resolved
14 October 2025
Interest on outstanding demand effected in accordance with rectified order u/s 154 then whether the interest accrued on demand shall be counted from original assessment order or rectified order?
14 October 2025
Interest on an outstanding tax demand, when changed due to a rectified order under section 154, is generally calculated from the date of the original assessment order and not from the date of the rectified order. This is because the notice of demand issued alongside the assessment order forms an integral part of the assessment, and if rectification increases the demand, interest accrual starts from the date on which the original assessment order's demand fell due, unless the rectified order creates a new demand for the first time.
14 October 2025
The Patna ITAT and Supreme Court have affirmed that the notice of demand is an essential part of the assessment order, so rectification relates back unless it introduces a demand for the first time.
If the original assessment order specified "Nil" demand due to an error, and the rectified order under section 154 later specifies a tax payable, then interest under section 220(2) accrues only from the date the rectified order was served — because payment was never demanded in the first place. If, instead, a demand was correctly raised in the initial order, and the rectification simply modifies (increases/decreases) the sum, interest runs from the due date of the original demand.
Judicial precedents underscore that rectified demand normally relates back to the date of the original order unless the demand itself was created for the first time by the rectification.
If the original assessment order specified "Nil" demand due to an error, and the rectified order under section 154 later specifies a tax payable, then interest under section 220(2) accrues only from the date the rectified order was served — because payment was never demanded in the first place. If, instead, a demand was correctly raised in the initial order, and the rectification simply modifies (increases/decreases) the sum, interest runs from the due date of the original demand.
Judicial precedents underscore that rectified demand normally relates back to the date of the original order unless the demand itself was created for the first time by the rectification.
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
- Refund Annexure-B
- Liable to deduct tds and 44ADA
- Sale of Equity shares for Purchase of Residential Property
- Nomination of Bank for refund in itr 2
- Section 56(2) of the Income tax Act 1961 , Gift to relative .
- ECO SUPPLY REPORTIONG IN GSTR-1
- Is Interest applicable for payment made through credit ledger vide DRC03 for FY 2020-21 & 2021-22
- CCFS 2026 Schemed
- Subscription paid to foreign customer
- Two seprate Invoice needed
- E Commerce GSTR1 & 3B how to file
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
- Form10BD was uploaded successfully without any Error but after 24 hours, Form10BE are not available
- Annexure B utility for GST Refund
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
- Restoration of certificate of practice
- Regarding change in correspondence address in SSP portal
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
