Interest for default in payment of advance tax Sec-234

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AUDITORS EDAPPAL (Querist)
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21 April 2023 whether Interest U/s 234B and 234C is not applicable in any cases, asessee being resident, not a senior citizen and having income from business. IT return is filing against sec 148 notice for A.y 16-17. Tax Liability is more than 10000. winman software only showing interest u/s 234A.
kindly help

Asha Kanta Sharma online

Asha Kanta Sharma

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09 July 2024 Interest under sections 234B and 234C of the Income Tax Act, 1961, are specific provisions related to the payment of advance tax. Here’s a breakdown of their applicability:

### Section 234B:

Section 234B applies when an assessee, who is liable to pay advance tax, fails to pay it or pays less than 90% of the assessed tax before the end of the financial year. Here are the key points:

- **Applicability**: It applies if the total tax liability (after deducting TDS and other credits) exceeds Rs. 10,000 in a financial year.
- **Interest Calculation**: Interest under 234B is calculated at 1% simple interest per month or part of a month, from the due date of filing the return (normally July 31 for individuals) till the actual date of filing the return.

### Section 234C:

Section 234C applies when advance tax paid by the taxpayer is less than the specified percentages of the assessed tax, as per the due dates specified for advance tax payments. Key points include:

- **Applicability**: It applies when advance tax payments are less than 15%, 45%, 75%, and 100% of the assessed tax, payable on specified due dates during the financial year.
- **Interest Calculation**: Interest under 234C is calculated on the amount of shortfall in payment of advance tax, and it is applied for the period from the due date of each installment to the actual date of payment of taxes.

### Your Situation:

- **Resident Assessee**: Since you are a resident and have income from business, these provisions are applicable to you if advance tax payments were not made as required.
- **Filing Against Section 148 Notice**: If you are filing the return in response to a notice under section 148 (for reassessment), you should ensure that any interest applicable under sections 234B and 234C is computed correctly based on the provisions mentioned.

- **Software Showing Interest Under Section 234A Only**: The software may be showing interest under section 234A (for delay in filing the return) only because it calculates interest based on the actual delay in filing the return. Interest under sections 234B and 234C are related to advance tax payments, not to the delay in filing the return.

### Action Steps:

1. **Verify Tax Liability**: Ensure that your tax liability and payments are correctly computed.
2. **Consult Tax Professional**: If you believe that interest under sections 234B or 234C should apply based on your advance tax payments, consult with a tax professional or accountant who can review your specific case and advise accordingly.
3. **Correct Calculation**: If required, manually calculate interest under sections 234B and 234C based on your advance tax payments and include it in your tax filing.

By understanding these provisions and consulting with a professional, you can ensure compliance with the Income Tax Act and avoid any penalties or incorrect assessments related to interest payments.