interest u/s 220(2) of the Income TAx Act
This query is : Resolved
29 March 2009
Please confirm whether interest is payable on a demand including interest u/s 234 B.
Whether Interest on Interest can be charged.
Please confirm whether interest is payable on a demand including interest u/s 234 B.
Whether Interest on Interest can be charged.
29 March 2009
1st para. Answer is Yes. Section 220(2) says If the amount demanded as per notice u/s 156 is not paid with in the period specified in that notice, the assessee shall be liable to pay simple interest @ 1%,w.e.f 8/8/2003,per month.
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29 March 2009
2nd para. Answer is yes. Citation:- 1)CIT V Narendra Doshi(2002) 254 ITR 606 (SC).
2) Modipan Ltd V CIT (2004) 270 ITR 257 (DEL).
2) Modipan Ltd V CIT (2004) 270 ITR 257 (DEL).
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01 April 2009
yes i agree with Mr BCW.
16 January 2015
What is Interest asked in TDS defualt Statement notice.
Amt. contains in - Interest u/s 220(2)
Amt. contains in - Interest u/s 220(2)
01 August 2024
### **Interest Under Section 220(2) of the Income Tax Act**
**1. Applicability of Interest Under Section 220(2):**
- **Section 220(2)**: This section deals with interest on tax that is not paid on time. It specifies that interest will be charged on the outstanding tax demand from the date of the demand till the date of payment.
- **Demand Including Interest Under Section 234B:**
- Interest under Section 220(2) is indeed charged on the total outstanding tax demand, which includes any interest levied under Section 234B (or any other section).
- Therefore, if there is a demand that includes interest under Section 234B, interest under Section 220(2) will be calculated on the total amount, including this interest.
**2. Interest on Interest:**
- **Interest on Interest:** Interest under Section 220(2) can be charged on the total outstanding amount, which may include interest calculated under various sections (like 234B). Thus, in effect, interest can accrue on the previous interest amount if the total demand remains unpaid.
**3. Interest on TDS Default (Notice for TDS Default):**
- **Interest on TDS Default:** If a notice is received for TDS (Tax Deducted at Source) default, it generally pertains to interest and penalties for not depositing TDS on time or not filing TDS returns.
- **Interest Calculation:** Interest on TDS defaults is typically calculated from the date the TDS was due to the date it was actually paid. This is governed by sections such as 201(1A) of the Income Tax Act.
**4. Amount Contained in Interest Under Section 220(2):**
- **Breakdown of Interest Under Section 220(2):** The amount mentioned in the notice or demand under Section 220(2) includes interest on the outstanding tax amount, including any interest previously calculated under other sections.
### **Summary:**
- **Interest on Total Demand:** Yes, interest under Section 220(2) is calculated on the total outstanding amount, including any interest under Section 234B.
- **Interest on Interest:** Interest under Section 220(2) can effectively be calculated on the total outstanding amount, which may include previous interest amounts.
- **TDS Default Interest:** This is typically calculated on delayed payment or non-filing of TDS returns and is specified in the notice of default.
**Action Steps:**
1. **Review Notices:** Carefully review any tax notices or demands to understand the total amount due and the basis of interest calculations.
2. **Payment:** Ensure timely payment of the total outstanding amount to avoid further accrual of interest.
3. **Consult Professional:** For complex situations or clarification, consulting a tax professional can help in accurately addressing and resolving tax issues.
**1. Applicability of Interest Under Section 220(2):**
- **Section 220(2)**: This section deals with interest on tax that is not paid on time. It specifies that interest will be charged on the outstanding tax demand from the date of the demand till the date of payment.
- **Demand Including Interest Under Section 234B:**
- Interest under Section 220(2) is indeed charged on the total outstanding tax demand, which includes any interest levied under Section 234B (or any other section).
- Therefore, if there is a demand that includes interest under Section 234B, interest under Section 220(2) will be calculated on the total amount, including this interest.
**2. Interest on Interest:**
- **Interest on Interest:** Interest under Section 220(2) can be charged on the total outstanding amount, which may include interest calculated under various sections (like 234B). Thus, in effect, interest can accrue on the previous interest amount if the total demand remains unpaid.
**3. Interest on TDS Default (Notice for TDS Default):**
- **Interest on TDS Default:** If a notice is received for TDS (Tax Deducted at Source) default, it generally pertains to interest and penalties for not depositing TDS on time or not filing TDS returns.
- **Interest Calculation:** Interest on TDS defaults is typically calculated from the date the TDS was due to the date it was actually paid. This is governed by sections such as 201(1A) of the Income Tax Act.
**4. Amount Contained in Interest Under Section 220(2):**
- **Breakdown of Interest Under Section 220(2):** The amount mentioned in the notice or demand under Section 220(2) includes interest on the outstanding tax amount, including any interest previously calculated under other sections.
### **Summary:**
- **Interest on Total Demand:** Yes, interest under Section 220(2) is calculated on the total outstanding amount, including any interest under Section 234B.
- **Interest on Interest:** Interest under Section 220(2) can effectively be calculated on the total outstanding amount, which may include previous interest amounts.
- **TDS Default Interest:** This is typically calculated on delayed payment or non-filing of TDS returns and is specified in the notice of default.
**Action Steps:**
1. **Review Notices:** Carefully review any tax notices or demands to understand the total amount due and the basis of interest calculations.
2. **Payment:** Ensure timely payment of the total outstanding amount to avoid further accrual of interest.
3. **Consult Professional:** For complex situations or clarification, consulting a tax professional can help in accurately addressing and resolving tax issues.
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