Advance tax

In my opinion interest should be charged because anything paid to govt after due date is liable to interest. It is loss to govt so it will definitely recover it with interest.

No interest u/s 234B (i.e. Interest for defult in Payment of Advance Tax) would be charged provided required amount is paid before 31st March.

However interest u/s 234C (i.e. Interest for deferment) has to be paid in this case.

Interest on default of Advance Tax payments is of Two Types- Interest u/s.234B and 234C. Interest under section 234B is calculated from begining of Assessment Year till the date of Self assessement tax paid u/s.140A. Hence any tax paid on or before 31st March shall be deducted from Tax payable while computing 234B interest. Hence tax paid on 18th March will be considered as Advance tax for 234B Interest even though it falls after 15th March.

Interest under section 234C will consider payments made on before 15th March as Advance tax with exceptions a) the amount of capital gains; or (b) income of the nature referred to in sub-clause (ix) of clause (24) of section 2, owing to uncertainity or failure to estimate Income. but it manadate payment of Tax on such Income on or before 31st March of Financial year if such transaction resulting Tax effected on or after 15th March and on or before 31st March of Financial year. This is Provided in Inome tax act itself and you can refer it in National website of Income tax.

Nuli,

Thanks for our crisp and clear reply to my query. Still Iam confused on this matter. Kindly look into my following case.

We have got a share investment company. Our Auditor told us that AO wont consider the matter of income realised after march 15. Because how will AO know that we earned income after march 15?and we would be required to pay interest u/s 234C on intimation of assessment order. Is that ture? Can u please quote any case law? 

I will give an example.

Suppose we sold 10000 shares of Reliance Industries at Rs. 1050 on march 18. The same were bought at a cost of Rs.850 net per share on  Nov 16, 2015. Now we have realised short term capital gains of Rs. 20,00,000. I have ignored MAT in this case.

Our tax liability in this case will be 20,00,000*15/100 ie Rs. 3,00,000/-. and we paid tax oon 16 March, 2016 for AY 2016-17. Now my question is will AO charge interest u/s 234C for deferment of advance tax? I have  found in many previous Assessment Orders that AO charge interest u/s. 234C even though there is no deferrment of advance tax in this case.

Thanks & Regards,

Arjun Rajagopal

In my view as you are Share Investment Company, Profits you arrive from those transactions has to be offered under Profits from speculation business which is not eligible for exemption from payment of Advance tax under section 234B and C