Interest on income tax for increased monthly salary

This query is : Resolved

Ayan (Querist)
Follow

18 August 2012 Hi,

This topic would certainly be a very unique post in this forum and would be a little difficult to answer even for the experts, but I do hope I would get a proper answer for my query here.

I changed my job twice during the previous financial year. I was part of company X from Apr'11 till December' 11, was an employee of Org Y from Jan 2012 to Feb 2012, and changed my company again to Org Z in the month of March' 12. Because of this TDS deduction from my companies was not smooth, and it has created a lot of confusion regarding the interest calculation of the delayed tax payment.

As I was a part of Org X till Dec, 2011 hence TDS deduction was smooth till December' 11. But after I changed my companies TDS deduction has not been done and I had to pay the residual amount of tax on my own.

Following is a rough calculation of my salaries + bonus earned during previous financial year:

Taxable Income from Org X (Tenure Apr' 11 - Dec' 11) - 5.5L (aprx), TDS paid 45K.

Additional taxable Income from Org Y (Tenure Jan' 12 - Feb' 12) - 2L (aprx), TDS paid 0.

Additional taxable Income from Org Z (Tenure Mar' 12) - 4.2L (aprx), TDS paid 0.

So the total (tax + edu cess) liability is 2.1L (Apprx), hence I made an additional tax payment of 1.25L in the month of April' 12 and rest 40K in the month of July' 12, so that the pending tax liability becomes NIL.

Now the question I have is: As instead of paying the TDS I paid the cumulative tax for the salary earned during Jan - Mar, in the month of April and July, hence how the interest will be calculated on the tax component incurred during this phase? And during caculating the interest (simple interest of 1% per month) do I need to add all the 3 Org's salary together and need to divide it in flat 30/30/40 percent's due date, calculate the delay incurred and then calculate the interest on a prorata basis? Or as I had not delayed the tax payment till Dec'11 hence the simple interest amount will be calculated from the month of Jan'12 as per my earning for the rest of the 3 months, on a prorata basis? As more than half of my previous year's earning are from the last 3 months of previous financial year hence I hope that I need not pay the interest calculated on the delay incurred on a flat 30/30/40 percent of the TOT income due date basis!! Please advise.

Many Thanks and Best Regards.

Gaurav Tripathi

Gaurav Tripathi (Expert)
Follow

18 August 2012 Hi Aryan,

I will advice you to visit some practicing CA with your all documents. As only then it would be possible to advice you perfectly.

However... as you said that you had changed jobs. Then the easiest way is:

add the income (as per your pay slips)
then calculate all your deductions,
and after that calculate your tax liability.

After getting your liability subtract TDS deductions.

For interest calculation (let the system to calculate) if you are not practicing (as it seems to me) don't try to calculate. As there are lot of small things.

Remember:
My answer given above is only for information. Its limited up-to my understanding of your question. Kindly reach with documents for better clarification.

Ayan

Ayan (Querist)
Follow

19 August 2012 Hi Gaurav,
Many thanks for your reply.
Gist of my problem is as below:
I was with Employer 1 till December'11, till that date TDS has been deducted every month and pending tax was NIL.
When I changed company in Jan and again in March, TDS has not been deducted in neither of the latter companies.
Problem I am facing is as follows -
2/5th of my total taxable salaries has been earned in first 9 months and appropriately TDS has been deducted and deposited on time.
And as 3/5th of my taxable salary is earned through last 3 months of my Job, that too 1/5th in Jan-Feb, and 2/5th in March'12.

Now as par the normal 30/30/40 rule, I should have cleared 60 percent of my total tax by Dec 15, where as by that time my earning was only 40 percent of my total income. So do I need to still pay the advance tax on extra (60 - 40) = 20 percent? Or as the advance tax was paid as per my earning till the month of december, hence the interest on tax should only be calculated on the residual 60 percent of salary on a pro rata basis starting from month of January till I clear the tax amount?

Upgrade to CAclubindia Pro. Subscribe Now!

Ayan

Ayan (Querist)
Follow

19 August 2012 Got to know from Mr. Sharma that even if you earn 40 percent of your total income by Dec 15, then also you are liable to pay advance tax on 60 percent of your total income (even though might not be knowing at that point of time how much jump in salary you would get in the remaining time frame of ongoing financial year). This is sheer injustice I must say.. Please let me know if there is any amendment done on this aforesaid tax rule..