Interest charges u/s 234B , 234C ( URGENT )

Dear CA Club ,

While filing ITR1 this year  , I observed additional interest components u/s 234B and 234C being charged when we add FD interest income .

When 10% TDS is already deducted by bank while paying out interest and deposited the tax with govt , am curious to understand where might be the delay has happened ( as these 2 sections clearly says delay in tax deposits ) ) Is it due to any potential delay in tax deposits by banks  itself ? 

Can we nullify these 2 components by any chance ? 

Kindly help  urgently 🙏

Best Regards 

 

 

 

 

 

Replies (7)
Quick Summary
This discussion addresses concerns about interest charges under sections 234B and 234C of the Income Tax Act, specifically when filing ITR1 with Fixed Deposit (FD) interest income. The user is questioning why these charges are applied when TDS has already been deducted by the bank. Responses suggest that interest may be levied if the total tax liability exceeds £10,000 after TDS and advance tax payments, potentially due to timing differences in TDS deduction (e.g., Q4 vs. Q1) or if advance tax wasn't paid sufficiently, especially for those in higher tax brackets.

The interest component gets activated only if you have tax liability over and above Rs. 10,000/- after deduction of all the TDS deducted & advance taxes paid.

If your tax liability is below that, you need not worry.

It may be added because sometimes bank deduct TDS in Q4 but your income is earned in Q1.

it may be the reason, may be I'm wrong

Yes sir , it's more than 10K . But I'm trying to understand where might  be the delay & who delayed ?

Thanks Shivam , you mean Q4 of 2021 and Q1 of 2022 for FY 21-22 ?

But I don't have any FD interest income in Q1 of 2022 but very little SB interest income in Q1 of 2022 . 

Please help clarify !

It can be clarified after analysing computation!

Bank deducts TDS @ 10%. If you are in higher tax bracket ,your interest income will be taxed at higher slab. Since you did not pay advance tax therefore your are liable to pay interest penalty.

Thanks mani for this , can you please help understand, when and how to pay advance tax if my interests are during April , June , Sep and December during the FY . 

 

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