Interest u/s 234 b and 234 c

Interest on non payment/default of advance tax

There is two sections which dealt with interest on non payment or default in payment of advance tax.

Sec 234B- it applied on two cases

1 when assessee who is liable to pay to pay advance tax don’t pay advance tax at all. Then interest is chargeable 1% pm for every month or part of the month from 1^st April to the date of determination on total income u/s 143(1) or where regular assessment is made to the date of such regular assessment.

2 when assessee pays some advance tax but it is less than 90% of assessed tax then interest is chargeable 1% pm for every month or part of the month on Assessed Tax – advance tax (which include TDS/TCS and relief u/s 90 or 91 and relief u/s 90A and tax credit u/s 115JAA or 115JD). Interest will be charge from 1^st April to the date of determination on total income u/s 143(1) or where regular assessment is made to the date of such regular assessment.

Situations:

Advance tax is paid after 1^st April but before regular assessment. Then interest will be charged in two parts:

1. From 1^st April to Advance tax deposit date same as per mentioned above
2. From date of deposit of advance tax, tax will be calculated on assessed tax - advance tax paid before – new deposit advance tax

In tax is increased in reassessment. Then interest will be payable @ 1% from date of assessment u/s 143(1) or regular assessment to date of reassessment. Interest will be charged on additional amount of tax.

Sec 234C- it is applicable in two types

For Non-corporate assessee

If Advance tax is paid on or before 15 Sept is less than 30% then simple interest 1% for 3 months on payable tax*-paid tax till 15 September

If Advance tax is paid on or before 15 Dec is less than 60% then simple interest 1% for 3 months on payable tax*-paid tax till 15 September

If Advance tax is paid on or before 15 March is less than 100% then simple interest 1% on payable tax*-paid tax till 15 September

* payable tax means Tax on total income declared in return - TDS/TCS and relief u/s 90 or 91 and relief u/s 90A and tax credit u/s 115JD.  For 15 Sept 30%, for 15 dec 60% and for 15 March 100%

For corporate assessee

If Advance tax is paid on or before 15 June is less than 12% then simple interest 1% for 3 months on payable tax*-paid tax till 15 September

If Advance tax is paid on or before 15 Sept is less than 36% then simple interest 1% for 3 months on payable tax*-paid tax till 15 September

If Advance tax is paid on or before 15 Dec is less than 75% then simple interest 1% for 3 months on payable tax*-paid tax till 15 September

If Advance tax is paid on or before 15 March is less than 100% then simple interest 1% on payable tax*-paid tax till 15 September

* payable tax means Tax on total income declared in return - TDS/TCS and relief u/s 90 or 91 and relief u/s 90A and tax credit u/s 115JD.  For 15 June 15%, for 15 Sept 45%, for 15 dec 75% and for 15 March 100%

Point to be noted, interest u/s 234 C can’t be changed even if in assessment tax is increased. As this interest is based on income declared by assessee in his return. So even commissioner can’t increase interest u/s 234C

Waiver/reduction  of interest u/s 234 B or 234C

By the power of sec 119(2)(a) the CBDT have directed vide order dt 2^nd June 1994 that in case where the income arise or accrues due to order of court, statutory authority of Govt then interest u/s 234 A B C can be reduced or waived by Chief commissioner/ Director General.