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Interest U/s. 234A

sunil c (CA Practice ) (236 Points)

27 September 2021

Sir,

While filing ITR Form-2 for the F.Y. 2020-2021, Interest U/s. 234A for the month of September-2021 has been charged in the Income Tax Utility even after Self Assessment Tax / Balance Tax has been paid on 27th August, 2021 with interest.

Additional Data for reference :

1. Total Tax Liability : Rs. 2.30 Crore

2. Advance Tax Paid on 15th March, 2021 :Rs. 1.00 Crore.

3. Self Assessment Tax Paid on 27th August, 2021 of Rs. 1.30 Crore with Interest u/s 234A for August month.

4. Income Tax Filing Initiated on - 27th September, 2021.

Kindly guide us whether the Interest charged U/s. 234A for the month of September is appropriate or not even after paying Entire Tax Liability in the month of August & Filing the same return in the month of September.

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7 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 27 September 2021

Though the due date for filing of ITR for the assessment year 2021-22 has been extended, no relief is provided from the interest chargeable under Section 234A if the tax liability exceeds Rs.1 lakh.

Thus, if self-assessment tax liability of a taxpayer exceeds Rs.1 lakh, he is liable to pay interest under Section 234A from the expiry of the original due date, that is 31 July 2021.

So it is appropriate, interest lecied for the month of August, 2021.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 27 September 2021

Extract from: Circular No. 17/2021, Dated 9th September, 2021

Subject: Extension of time lines for filing of Income-tax returns and various reports of audit for the Assessment Year 2021-22- reg.

" .... Clarification 1: It is clarified that the extension of the dates as referred to in clauses (9), (12) and (13) of Circular NO.9/2021 dated 20.05.2021 and as referred to in clauses (1), (4) and (5) of this Circular shall not apply to Explanation 1 to section 234A of the Act, in cases where the amount of tax on the total income as reduced by the amount as specified in clauses (i) to (vi) of sub-section (1) of that section exceeds one lakh rupees." .....

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sunil c (CA Practice ) (236 Points)
Replied 27 September 2021

Sir,

Interest U/s. 234A for the month of August-2021 has been charged and paid already, our concern is for the month of September-2021, as we have paid all the balance taxes on 27th August, 2021 but we are filing the return in September due to glitches in the Income Tax Utility.

Kindly guide us, whether Interest U/s. 234A for the month of September-2021 will be charged or not ?

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 27 September 2021

No. As the interest is levied over late payment of tax, while due date of filing is already extended.

As the tax was already paid in August, it should not be levied for September month.

Vishal Mittal (Banker) (31 Points)
Replied 30 September 2021

As per Section 234A.1.a, interest is calculated till the date of filing of return. As you have filed the return in Sept, so interest will be applicable till Sept.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 30 September 2021

CPC has already extended the due date of filing ITR, except interest that is applicable u/s. 234A, (in case tax liability is Rs. 1 lakh or more.) till the date of its payment.

D K Gupta (Service) (95 Points)
Replied 03 October 2021

I paid ITax on July 31 and only internet on non payment of advance tax u/ s 234 B & C about 24K unpaid due to glitches but now portal showing interest for 234A.

I paid remaining tax liability on 28 September but not filled ITR-2 due to glitches in e-filing of Form 67. Today submitted from 67 and will try to submit return. God knows what they will charge extra. Hope all is well.