Non payment of interest on income tax
This query is : Resolved
08 December 2012
A Private company has not paid interest u/s 234A, 234B, 234C although it had paid self assessment tax. What will be impact in so far as tax liability and penality as per income tax provisions. It is urgent.
08 December 2012
The interest will be levied by the department at the time of processing of return and intimation u/s 143(1) shall be issued showing a demand.
The company can pay the amount after receipt of the intimation.
The company can pay the amount after receipt of the intimation.
10 December 2012
Sir,
Intimation from income tax is procedural thing. Please through some light on the income tax provision about the consequences of non payment of Interest because after late filing of ITR, Icnome tax return can not be revised.
Intimation from income tax is procedural thing. Please through some light on the income tax provision about the consequences of non payment of Interest because after late filing of ITR, Icnome tax return can not be revised.
03 August 2024
Non-payment of interest under sections 234A, 234B, and 234C of the Income Tax Act, 1961, can have significant consequences. Here’s a detailed explanation of the implications, including tax liability, penalties, and procedural aspects:
### **1. **Understanding Sections 234A, 234B, and 234C**
**1.1 **Section 234A: Interest for Delay in Filing Return**
- **Applicability**: This section applies if you fail to file your income tax return by the due date.
- **Calculation**: Interest is charged at 1% per month (or part of a month) on the outstanding tax amount from the due date of filing until the date of filing the return.
**1.2 **Section 234B: Interest for Default in Payment of Advance Tax**
- **Applicability**: This section applies if you fail to pay the advance tax or if the advance tax paid is less than 90% of the assessed tax.
- **Calculation**: Interest is charged at 1% per month (or part of a month) on the tax due (as per the self-assessment tax) from the start of the financial year until the date of assessment or until the payment of tax.
**1.3 **Section 234C: Interest for Deferral of Advance Tax**
- **Applicability**: This section applies if you fail to pay the advance tax as per the due dates specified (15th June, 15th September, 15th December, and 15th March).
- **Calculation**: Interest is charged at 1% per month on the shortfall of advance tax payment for each installment.
### **2. **Consequences of Non-Payment of Interest**
**2.1 **Impact on Tax Liability**
- **Interest Calculation**: If interest under these sections is not paid, it will be added to the tax liability. The total tax liability will include the tax payable as per the return plus the interest amounts under sections 234A, 234B, and 234C.
- **Non-Payment Penalty**: While non-payment of interest does not usually attract a separate penalty beyond the interest itself, it does increase the overall tax liability, which can have other financial implications.
**2.2 **Penalties**
- **Interest as Penalty**: Interest under these sections functions as a penalty for delay in compliance. There is no additional penalty apart from the interest for these defaults. However, if the total tax liability is not settled, further legal actions or penalties might be applied by the tax authorities.
**2.3 **Procedural Aspects**
- **Intimation from Income Tax Department**: An intimation from the Income Tax Department (e.g., under section 143(1)) will reflect the interest payable, but it is a procedural step and does not alter the liability. It’s essential to ensure the interest is paid even if the intimation has not been received or acted upon.
- **No Revision of Return**: As you mentioned, once the return is filed, it cannot be revised for this purpose. The interest must be paid separately to settle the tax liability.
### **3. **Steps to Address Non-Payment**
**3.1 **Calculate and Pay Interest**
- **Determine Amount**: Calculate the interest due under sections 234A, 234B, and 234C based on the outstanding tax and delay periods. Use the interest rates prescribed (1% per month) to compute the total interest.
- **Make Payment**: Pay the interest through the appropriate channels (e.g., online payment on the income tax e-filing portal). Ensure that you keep the receipt for your records.
**3.2 **File Rectification Request (if applicable)**
- **Rectification**: If there are errors in the return that affect the calculation of interest, file a rectification request under section 154 to correct the mistakes and adjust the tax liability accordingly.
**3.3 **Consult a Tax Professional**
- **Seek Advice**: Given the complexity of tax laws and interest calculations, consulting a tax professional or chartered accountant is advisable. They can help ensure accurate calculation, payment, and compliance.
### **4. **Summary**
- **Interest on Delay**: Non-payment of interest under sections 234A, 234B, and 234C will increase your tax liability. The interest should be paid as it acts as a penalty for delayed compliance.
- **Payment and Compliance**: Pay the interest calculated based on the prescribed rates. There is no additional penalty beyond the interest itself, but ensure all tax dues are settled to avoid further issues.
- **Seek Professional Guidance**: Consulting a tax professional can help ensure that all payments are correctly calculated and made, and to handle any potential issues with the tax authorities.
Handling these payments and issues promptly will help in managing your tax obligations effectively and avoiding any further complications.
### **1. **Understanding Sections 234A, 234B, and 234C**
**1.1 **Section 234A: Interest for Delay in Filing Return**
- **Applicability**: This section applies if you fail to file your income tax return by the due date.
- **Calculation**: Interest is charged at 1% per month (or part of a month) on the outstanding tax amount from the due date of filing until the date of filing the return.
**1.2 **Section 234B: Interest for Default in Payment of Advance Tax**
- **Applicability**: This section applies if you fail to pay the advance tax or if the advance tax paid is less than 90% of the assessed tax.
- **Calculation**: Interest is charged at 1% per month (or part of a month) on the tax due (as per the self-assessment tax) from the start of the financial year until the date of assessment or until the payment of tax.
**1.3 **Section 234C: Interest for Deferral of Advance Tax**
- **Applicability**: This section applies if you fail to pay the advance tax as per the due dates specified (15th June, 15th September, 15th December, and 15th March).
- **Calculation**: Interest is charged at 1% per month on the shortfall of advance tax payment for each installment.
### **2. **Consequences of Non-Payment of Interest**
**2.1 **Impact on Tax Liability**
- **Interest Calculation**: If interest under these sections is not paid, it will be added to the tax liability. The total tax liability will include the tax payable as per the return plus the interest amounts under sections 234A, 234B, and 234C.
- **Non-Payment Penalty**: While non-payment of interest does not usually attract a separate penalty beyond the interest itself, it does increase the overall tax liability, which can have other financial implications.
**2.2 **Penalties**
- **Interest as Penalty**: Interest under these sections functions as a penalty for delay in compliance. There is no additional penalty apart from the interest for these defaults. However, if the total tax liability is not settled, further legal actions or penalties might be applied by the tax authorities.
**2.3 **Procedural Aspects**
- **Intimation from Income Tax Department**: An intimation from the Income Tax Department (e.g., under section 143(1)) will reflect the interest payable, but it is a procedural step and does not alter the liability. It’s essential to ensure the interest is paid even if the intimation has not been received or acted upon.
- **No Revision of Return**: As you mentioned, once the return is filed, it cannot be revised for this purpose. The interest must be paid separately to settle the tax liability.
### **3. **Steps to Address Non-Payment**
**3.1 **Calculate and Pay Interest**
- **Determine Amount**: Calculate the interest due under sections 234A, 234B, and 234C based on the outstanding tax and delay periods. Use the interest rates prescribed (1% per month) to compute the total interest.
- **Make Payment**: Pay the interest through the appropriate channels (e.g., online payment on the income tax e-filing portal). Ensure that you keep the receipt for your records.
**3.2 **File Rectification Request (if applicable)**
- **Rectification**: If there are errors in the return that affect the calculation of interest, file a rectification request under section 154 to correct the mistakes and adjust the tax liability accordingly.
**3.3 **Consult a Tax Professional**
- **Seek Advice**: Given the complexity of tax laws and interest calculations, consulting a tax professional or chartered accountant is advisable. They can help ensure accurate calculation, payment, and compliance.
### **4. **Summary**
- **Interest on Delay**: Non-payment of interest under sections 234A, 234B, and 234C will increase your tax liability. The interest should be paid as it acts as a penalty for delayed compliance.
- **Payment and Compliance**: Pay the interest calculated based on the prescribed rates. There is no additional penalty beyond the interest itself, but ensure all tax dues are settled to avoid further issues.
- **Seek Professional Guidance**: Consulting a tax professional can help ensure that all payments are correctly calculated and made, and to handle any potential issues with the tax authorities.
Handling these payments and issues promptly will help in managing your tax obligations effectively and avoiding any further complications.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Applicability
- CPC Processing IT Return for AY 2023-24 without recognizing the Taxation Option under New Regime
- Where to show the RCM on Rent paid to unregistered landlord
- Is Aadhar PAN linking required for opening bank account?
- RCM - commercial rent paid to URP under GST
- Offsetting interest income against derivative trading losses
- TDS NUMBER SURRENDER
- GSTR-3B - Do I file nil when there is no sale but I've bought raw materials
- Gst Sales of FY 2023-24
- Legal heir raised refund , but refund issued to the closed account of deceased.
- My Last working day in current org is in novemebr 2024 but they are asking me to submit IT proof
- Indexation benefit applicability
- SEC 54 OF IT ACT
- Passed group 2 exams under wrong gender
- REQUIREMENT OF 15CB
- QUERY FOR RCM ON RENT
- APPEAL-CIT
- Payable outstanding for years disallowance
- Whether still royalty
- Issue of gst e invoice
Trending Online Classes
-
Excel Mastery Program
CA Rishabh Pugalia
CAclubindia
