Section 234b

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Querist : Anonymous

Querist : Anonymous (Querist)

23 November 2013 Greeting to all
This might be a challenging question for some. Are you ready to take up the challenge??
My query is that suppose a tax payer (Non corporate) had to pay for eg. Rs. 1,00,000 (inclusive of edu. cess) as tax (consider that no advance tax was paid on any of the due dates). Assessee files his return in the month of july11 (considering he not liable to audit) he would be obliviously be liable for interest under 234b & 234c in this case. This shall add upto as under
234 B
100000 * 4% =4000
234 C
30% of 100000 = 30000 * 3% = 900
60% of 100000 = 60000 * 3% = 1800
100% of 100000 = 100000 * 1% = 1000
Total = 3700
So total liability of the assessee in the month of july 11 is 1,00,000+4000+3700=1,07,700
But the assessee paid only Rs. 1,05,000 in month of july 11
Now a demand notice arrives some time in month of dec 11. Will interest component of 234B change in this case?? In simple language will assesssee have to pay more than Rs.2700 (107700-105000) ??
if yes, then why does government say that the interest under section is 234 is charged at simple interest as in this case assessee has clearly paid his tax component plus some of the interest part.

Plz ans with a link or attachment that would support your ans.

Thanks for your valuable time.
Regards
Nisarg

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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24 November 2013 The department's point of view.
.
Your Payment of Interest U/s 234B & 234C till the date of payment is accepted.
.
105000-3700-4000=97300.
.
Against the tax amount of Rs 1.00 lac you have paid tax lesser by Rs. 2700/-.
.
Are you still not liable for interest ?
.

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