Query about Section 234A & 234B

Tax queries 2597 views 9 replies

Vijay Padiyar

Software Engineer

24 Points Joined September 2009

Hi

I am a bit confused about Sections 234B and 234C of Indian IT Act. I have two questions:

Q1. Let's say I worked in Company A for six months from April 1, 2008 to September 30, 2008. Then I worked in Company B from October 1, 2008 to March 31, 2009. But I did not provide my Form 16 from Company A to Company B, and so Company B deducted tax assuming I had no prior income during that financial year.

In this case, obviously the total TDS in my case is going to be far less than the actual tax payable by me. Let's assume I pay that balance tax in cash on July 31, 2009 (last day of filing IT returns). In that case, do I need to pay any interest under 234B or 234C? Are these applicable to tax on salary income?

Q2. For this question, let's assume I worked in only one company throughout the year, so I have no additional tax payable on salary income over what has already been deducted at source.

However, I now had some earnings from interest income (from fixed deposits) during the year from April 1, 2008 to March 31, 2009. I did not notice this as I did not check my bank statements during the year. In April 2009, I received the Form 16A from my bank detailing the interest paid and TDS deducted at 10% rate. The Form 16A has 5 entries, meaning that I was paid interest 5 times around the year (for different FDs).

However, my income falls in 30% tax bracket. So the total interest income must be taxed at 30%, meaning that I have some balance tax payable. I pay this balance tax in cash on July 31, 2009 (last date for filing IT returns). So now, am I liable to pay anything under 234B or 234C? Are these applicable to interest income?

Regards

Vijay

Replies (9)

abhishek

STUDENT

162 Points Joined March 2008

i think sections will be applicable to both,i think so.

santhosh

636 Points Joined January 2009

Income tax act mandates Assessee other than Assessee's having Income from Salaries to Pay Advance Tax in Installments failing which Interest U/s 234 B & C will be Levied. But 234A interest for Filing return U/s 139(4).

Satish

CA Final Student

479 Points Joined September 2008

If your final tax liability, in both the cases after deducting TDS already made, exceeds Rs. 5000/- then interest is payable u/s 234 B & C. If you could not file your IT return before due date, interest u/s 234 A will also attract.

C.A. ANKIT SINGHAL

CA PRACTICE

52 Points Joined January 2009

i agree with satish, now these limit is extend upto rs.10000 in finance act-2009. there is no difference in salary income or other income in advance tax provison

Ashish M

Chartered Accountant

2731 Points Joined January 2008

A.1

YOu are liable to pay the tax which comes out to be on the total income on the respective dates exceeding the TDS already deducted by both the employers. For this u, on ur own side, hve to club the income on that date adn calculate the tax according to tax bracket u r ending in by merging in both incomes...if it comes out to be more than Rs.5000/-........in the event of default, 234B and C interest is leviable...........

A.2

For the purpose of interst on FD, u have to keep a tab on the amt. of interest regularly credited and for the purposes of advance tax, include the said income upto the respective date in ur account.........as the amount credited in ur account 5 times. Had it accrued on 5 times, but recieved at the end of yr. u can include at the last installment of advc. tax as deeming it income on reciept basis. but for present situatoion, advance tax sould be calcluated merging the two onteh respective dates........!!!

Dharmesh k. Dubey

Student

188 Points Joined February 2009

hi Frndz ,

Until the assesse's total tax liabilty within the p.y . exceeds 5000 he is not liable to pay advance tax nd so der is no question,of 234b.however in this case the tax liability exceeds the said limit nd it is obligatory for the employer to give details of employees who hav joined in the mid of the year through form 12B.So if ur employer failed to deduct t.d.s then he is defaulting assesse nd the tax cnt b paid by in cash as for people havng only salary income the only medium of tax payment is T.D.S which is deducted by the employer.

Satish

CA Final Student

479 Points Joined September 2008

Hi Dharmesh, It is not obligatory on the part of employee to submit details in form 12B. But it is in the interest of the employee to do so since there is no legal obligation on employer also to take the details in form 12 B. As far as advance tax is concern, it is required to be paid by everybody whose estimated tax liability exceeds Rs. 5000/- irrecspective of under which head he is liable to pay tax. So employee in his own interest should submit Form 12B so that he can avoid Advance tax liability.

Guest

Mr. Vijay,

There is no link between payment of advance tax and working with different employer. It is your duty predict you tax liability and pay advance tax after deducting TDS which was deducted.

You can't say that you haven't noticed your bank statements. Again ignorance of law or ignorance of fact will never be excuse.

It is simple. If your tax liability exceeds Rs,5000 (Rs.10,000 in case of AY 2010-11) then you need to pay advance tax as per the rule. If you didn't pay then you will have to pay interest. Sec 234 A or 234 B or 234 C applies to all assesse irrespective of their status. (i.e. whether salary person or business person etc.

Do reply for my answer...