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Interest on income tax

manoj (a) (32 Points)

22 June 2011

Income tax paid by my friend in F.Y. 10-11 falls short by approx. 5000.Kindly tell the interest payable on this amount and under which section does this interest comes? ITR2 has 3 columns for interest payable under Sec. 234A, 234B and 234C. Where should this interest be shown?

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10 Replies

Arvind Sharma (ACA) (1432 Points)
Replied 22 June 2011

Int generally lived u/s

234A - in case of late filling of ROI.

234B - total tax paid as advance tax is less than 90% of tax liability.

234C - short payment of advance tax installments.

For computing int u/s 234B & 234C, we have to ignore benefit of Advance tax..

Further, Advance tax liability arises when Tax Payable (Tax Liab - TDS) is Rs. 10,000 or more.

So, you have to provide complete detail, then we can say whether Interest is payable or not.

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CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 22 June 2011

yess agree with arvind

1 Like

manoj (a) (32 Points)
Replied 22 June 2011

Thanks Arvind

Total tax : Rs290000.

Total tax liability after deducting TDS was approx. Rs90000. Payments of advance tax are as follows: 1st installment:30000 , 2nd installment:30000, 3rd installment:25000. Balance tax due: Rs5000

So, according to your reply , interest has to be paid on Rs5000 both under section 234B and 234C? Kindly compute the interest under both these sections. Thanks..

Devpura Nikunj (student) (70 Points)
Replied 22 June 2011

@ manoj

Interest u/s 234C

1st advance tax Installment due = 90000 * 30% =Rs 27000 However your friend paid Rs. 30000 so no interest.

2 nd Advance Tax Due = 90000*60% = Rs 54000. However the total Tax paid is Rs 60000 hence no interest.

3 rd Installemnt= Rs 90000*100 % = Rs 90000. However only 85000 paid hence Interest on Rs.5000 for 1 month @ 1 %= Rs.50.

Interest u/s 234B

Assuming the tax calculated by you will be assessed tax .

Since the total tax paid by your friend is more than 90 % of the assessed tax no interst shall be applicable u/s 234B.

@*CS Siddharth Bumb. * (B.Com, CA Final, CS ) (5270 Points)
Replied 22 June 2011

Originally posted by : Arvind Sharma
	Int generally lived u/s 234A - in case of late filling of ROI. 234B - total tax paid as advance tax is less than 90% of tax liability. 234C - short payment of advance tax installments. For computing int u/s 234B & 234C, we have to ignore benefit of Advance tax.. Further, Advance tax liability arises when Tax Payable (Tax Liab - TDS) is Rs. 10,000 or more. So, you have to provide complete detail, then we can say whether Interest is payable or not.

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srinivass (CA Final) (2466 Points)
Replied 22 June 2011

till this day for F Y 10-11 for ur amount 234a is not appliocable.. and 234b,c are applicable for this if u can send following details i will send answer

1. total tax.

2.tds

3.advance tax if any

must mention capital gain if any.

1 Like

manoj (a) (32 Points)
Replied 22 June 2011

Originally posted by : srinivass
	till this day for F Y 10-11 for ur amount 234a is not appliocable.. and 234b,c are applicable for this if u can send following details i will send answer 1. total tax. 2.tds 3.advance tax if any must mention capital gain if any.

@ sirinivass

Thanks. So according to you both 234B and 234C are applicable. But Mr.Devpura nikunj doesn't seem to agree with you, according to him since total tax already paid is more than 90% of the assessed tax, so no interest is to be paid under section 234B.

Details for assessment yr 2011-2012 are as follows:

Total tax - 290000

TDS - 200000

Advance tax- 1st inst.:30000, 2nd inst.:30000, 3rd inst.:25000 (balance tax due:5000)

capital gain: NIL

Kindly compute the interest to be paid on 5000, under both sec 234B and 234C, assuming return has to be filed on25June.Thanks.

manoj (a) (32 Points)
Replied 22 June 2011

Can somebody please explain Section 234B in detail with respect to individual tax payer having income from only salary and bank interest...

Rohan Sen (student) (21 Points)
Replied 22 June 2011

my sister's income comes from agricultre. if i give 5 lakhs to my sister and she makes a fixed deposit in SBI. does she need to pay any tax or any kind of deductions in bank?