234b interest

Tax queries 991 views 7 replies

Rishita Motwani

senior associate

264 Points Joined November 2009

As per IT Act, 234B interest is levied when 90% tax is not paid by the assessee during the year

assessee has capital gains of 1 crore on 27th march 2014

therefore no 234C will be levied

but as last date for payment of advance tax is already over i.e.15 march 2014

assessee cannot pay advance tax and even was not liable to till 15.03.14

no liability of advance tax for those 1 crore gains means no interest u/s. 234B

so is he relieved from 234B liability or he has to pay interest u/s. 234B

plz revert asap

Replies (7)

NAVEESH DHAR

ADVOCATE- TAXATION ADVISOR

427 Points Joined November 2011

Interest u/s 334b 234c not applicable on tax on capital gains

Pls. see earlier discussion similar your case.. NO INTEREST ON CG TAX, IF TAX (if any) DEPOSITED ON OR BEFORE 31ST MARCH. Capital gain -interest 234b,c ? Total Replies : 4 by Mushak shareef on 04 August 2012 Dear Experts, My client sold his HP on 20/03/2012 on which he received capital gain which is taxable in A Y - 2012-13. He is an individual person getting salary and paid tax fully by the way of tds for his salary income. Is he liable to pay interest U/s 234B and C? Because he sold on the end of the year and received the income as capital gain if he sold in the beginning or the middle of the F Y we shall pay interest. What is the tax Treatment to this case? Kindly put light on it. Thanks in advance. by CA PARAS BAFNA on 04 August 2012 In case he pays tax on 31.03.2012, he will be not liable to Interest U/s 234B & 234C. If he does not deposits tax or deposits later, he has to pay interest U/s 234C @ 1%. Interest U/s 234B will be decided as and when he makes tax payment. by CA PARAS BAFNA on 04 August 2012 In case he pays tax on 31.03.2012, he will be not liable to Interest U/s 234B & 234C. If he does not deposits tax or deposits later, he has to pay interest U/s 234C @ 1%. Interest U/s 234B will be decided as and when he makes tax payment. by Member on 04 August 2012 In this case, interest u/s 234C will not apply as the CG accrued after 15th March. But the whole of CG Tax will have to be paid on or before 31st March. Even a delay of one day will entail interest u/s 234B on the whole of the tax payable. The liability for 234B starts with 1st April and ends on the date of payment of the tax due as self assessment tax.. by CA PARAS BAFNA on 04 August 2012 I agree with member. Interest U/s 234C will not be levied when the CG arises after 15th March. .

Jaikishan

168 Points Joined May 2012

Any payment made after 15th march but on or before 31st march of previous year avoids levy of section 234b.hence levy of 234 b will not arise.

Dixit

CA Final

2405 Points Joined April 2010

Agree with Jaikishan

Guest

Tax on Income arises after 15th march shall be paid upto 31st march..234b interest arises only if 90% of the tax assessed By assesse has not been submitted and that also on all amount pending(tax not paid upto 15th if below 90% and amt of tax arises after 15th march)...but capital gain cannot be assessed in advance upto 15th march therefore no role in 90%...but must be paid before 31st march..otherwise 234a section will attract interest

CA Rajat Goyal

Practice

57 Points Joined July 2009

Interest U./s 234C will not be applicable while the 234B will be applicable.

For Applicability of Sec 234B this is not necessary that interest under sec 234C must have been paid.

Analysing the provision of 234B which is-

. "Subject to the other provisions of this section, where, in any financial year, an assessee who is liable to pay advance tax under section 208 has failed to pay such tax or, where the advance tax paid by such assessee under the provisions of Section 210 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 comprised in the period from the 1st day of April next following such financial year to the date of determination of total income under sub-section (1) of Sec 143 and where a regular assessment is made, to the date of such regular assessment, on an amount equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid as aforesaid falls short of the assessed tax."

Analysis of Sec 234B:

1. The assessee is liable to pay advance tax u/s 208 as the tax assessee is more than Rs. 10000/- and;

2. Advance tax paid under the provision of sec 210 is less than 90% of Assessed Tax (irrespective of the fact 234C is applicable or not)

For applicability of provision of Sec 234B, only condition has to be satisfied that tax under sec 208 is liable to be paid. in other words tax assessed should be rs. 10000 or more and tax paid should be less than 90%.

In query both condition satisfies and hence sec 234B will be applicable.

Based on provisions:

Sec 208: Advance tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee during that year, as computed in accordance with the provisions of this Chapter, is ten thousand rupees or more.

Sec 210: . Every person who is liable to pay advance tax under section 208 (whether or not he has been previously assessed by way of regular assessment) shall, of his own accord, pay, on or before each of the due dates specified in section 211, the appropriate percentage, specified in that section, of the advance tax on his current income, calculated in the manner laid down in section 209

Sec 211: Only dates are specified.