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Why is interest levied u/s 234a when return was filed before Dec 31st ?

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V S

1 Points Posted on 24 December 2020

I filed my returns on Dec 22nd 2020 and was surprised to see an interest levied u/s 234A amounting in excess of Rs. 8000 . The Auditor explained that it is a system generated amount and I was being penalised for not paying the pending tax by September 30th. I was not entirely convinced by this but I went ahead and paid the pending tax along with this interest.

I have not seen any notification where any pending tax had to be paid by 30th September. I am strongly of the opinion that both payment of pending tax (by self assessment) and filing of returns are done together. Is it possible that the IT Dept will realise this when scrutinising my filing and return this unfair penalty at a later date ? It seems that their eFiling software has not been updated to show that Dec 31st is the last date.

Thanks in advance for comments that may follow.

Replies (3)

Quick Summary

This discussion explores why interest under Section 234A was levied despite filing income tax returns before the December 31st deadline. The user was charged interest for not paying pending tax by September 30th, even though they filed their return on December 22nd. It's clarified that Section 234A interest applies if self-assessment tax liability exceeds Rs 1 lakh. If tax was paid based on a system error and liability was under Rs 1 lakh, the Income Tax Department should refund the excess interest during processing.

ayusmita

Tax consultant

5895 Points Posted on 24 December 2020

As per the latest notification of due dates ITRs are not revised so due date is showing in back dated and interest in being cutting

Jalpa Joshi

86 Points Posted on 24 December 2020

If your tax liability exceeds Rs 1 lakh then you should pay Interest.

Otherwise by mistake or due to system error interest calculated under 234A and you have already paid tax according to it then whenever your return will be processed by income tax department they will refund excess tax paid by you in your bank account.