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Computation of advance tax

cs sharmila (company secretary) (150 Points)

04 May 2012

Calculate amount of interest under section 234c for ALTD

Income declared as per return Rs. 11,82,860

Advance tax paid on:

10.06.2011--- (Rs.48800); 11.09.2011---(Rs.97600) ; 09.12.2011----(Rs.158850); 03.02.2011----(Rs.20000)

How to calculate interest?

How to calculate Interest Under sec 234C?

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9 Replies

Tejas Jain (Chartered Accountant) (314 Points)
Replied 04 May 2012

Calculate Interest U/s. 234A, 234B, 234C; Return Due Date & Consequences of Late Filing Calculate Interest U/s. 234A, 234B, 234C; Return Due Date & Consequences of Late Filing DUE DATES FOR FILING TAX RETURNS WHAT ARE THE DUE DATES FOR FILING OF RETURNS? The Due dates for filing Income Tax returns are:- 1. Where the assessee is a Company – 30th September of the Assessment Year. 2. Where the assessee is a person other than a company:- a) where accounts of the assessee are to be Audited or a working partner of a firm whose accounts are required to be audited under the Income Tax Act or any other law – 30th September of the Assessment Year. b) Any other assessee – 31st July of the Assessment Year. CONSEQUENCES OF SUBMISSION OF RETURN AFTER DUE DATE If a return is submitted after the due date, the following consequences will be applicable: 1. The assessee will be liable for penal interest under section 234A. 2. A penalty of Rs 5,000 may be imposed under section 271F if belated return is submitted after the end of the assessment year. 3. If the return of loss is submitted after the due date, a few losses cannot be carried forward. 4. If the return is submitted belated, deductions allowable under certain sections will not be available. INTEREST U/S. 234-A FOR LATE OR NON-FURNISHING OF INCOME TAX RETURN For defaults in furnishing Return of income Simple interest @ 1% for every month or Part thereof from the due date of filing of the Return to the date of furnishing of the return & in case return is not filed, it is upto the date of completion of assessment u/s 144. The interest is calculated on the amount of the tax on the total assessed income as determined under sub-section (1) of section 143 or on regular assessment u/s 143(3) as reduced by the Advance Tax, if any, paid and any tax deducted or collected at source. IF AN ASSESSEE DOES NOT FILE HIS RETURN OF INCOME, IS ANY PENALTY IMPOSABLE UPON HIM? Yes, Penalty of Rs. 5000 is imposable for non-filing of return within the assessment year. Interest is also chargeable for non-filing or late filing, as shown above. IS TAX TO BE PAID DURING THE FINANCIAL YEAR ON THE BASIS OF PAY AS YOU EARN? Yes, Such payments have to be made in installments and are known as ‘Advance-Tax’ payments. However the liability for payment of advance tax arises only where the amount of such tax payable by the assessee during that year is Rs. 5,000 or more. The due dates and the percentage of installments of Advance Tax for assessees other than Companies are as below :- Due Date of installments Amount payable 1st on or before 15th September. Amount not less than 30% of such advance tax. 2nd on or before 15th December. Amount not less than 60% of such advance tax after deducting amount paid in earlier installment. 3rd on or before 15th March. Entire balance amount of such advance tax. In case of companies, there are 4 installments of advance tax payable on or before 15th June (15%); 15th Sept. (45%); 15th Dec. (75%); & balance amount of Advance Tax payable by 15th March. Also, any amount paid by way of Advance Tax on or before the 31st March of that year, is treated as Advance Tax Paid during that Financial Year. The percentages of 45% and 75% specified with reference to dates of 15th Sept. and 15th Dec. include the amount of advance tax paid earlier during the year. IF THE TAX PAYER FAILS TO PAY 90% TAX PLUS APPLICABLE INTEREST THEN HOW IS INTEREST FOR SHORT PAYMENT OF SUCH ADVANCE-TAX CALCULATED? INTEREST U/S. 234-B FOR SHORT PAYMENT OF ADVANCE TAX Shortfall in payment of Advance tax of more than 10%. Simple interest @ 1% for month or part thereof is chargeable w.e.f. 1st April of the Assessment Year to the date of determination of income u/s. 143(1) or regular assessment u/s 143(3) on the assessed tax. ‘‘Assessed tax’’ means the tax on the total income determined under sub section (1) of section No. 143 or on regular assessment u/s 143(3), as reduced by the amount of tax deducted or collected at source. HOW IS INTEREST FOR DEFERMENT OF ADVANCE-TAX CALCULATED? (A) INTEREST U/S. 234-C FOR DEFERMENT OF ADVANCE TAX (Non Corporate assessees) 1. If no advance tax is paid or the advance tax paid in 1st installment on or before 15th September is less than 30% of the tax payable on the returned income as reduced by taxes deducted at source. Simple interest @ 1% p.m. is chargeable on the amount of shortfall for a period of 3 months. 2. If no advance tax is paid or if the advance tax paid in 2nd installment on or before 15th December is less than 60% inclusive of 1st installment of the tax payable on the returned income as reduced by taxes deducted at source. Simple interest @ 1% p.m. is chargeable on the amount of shortfall for a period of 3 months. 3. If the advance tax paid on the current income on or before the 15th day of March is less than the tax due on the returned income. Simple interest @ 1% is chargeable on the amount of shortfall from the tax due on the returned income. B. INTEREST U/S 234C FOR THE CORPORATE ASSESSEES 1. If advance tax paid on or before June 15th is less than 12%. Simple interest @ 1% p.m. is chargeable on the amount of shortfall for a period of three months. 2. If advance tax paid on or before Sept. 15th is less than 36%. Simple interest @ 1% p.m. is chargeable on the amount of shortfall for a period of three months. 3. If advance tax paid on or before Dec., 15th is less than 75%. Simple interest @ 1% p.m. is chargeable on the amount of shortfall for a period of three months. If advance tax paid on or before March 15th is less than tax due on returned income (100%). Simple interest @ 1% is chargeable on the amount of shortfall from the tax due on the returned income.

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Arvind Sharma (ACA) (1432 Points)
Replied 04 May 2012

Interest will be Rs. 1126

Find attached file...

Attached File : 200449 975013 int us 234c.xlsx downloaded: 701 times

CA Akshay Kumar Mishra (Chartered Accountant ) (1784 Points)
Replied 04 May 2012

Tax on income declared of 1182860 = 365504

Advance tax payable upto Advance tax paid

1. 15.6.2011 = 12% of 365504 = 43860 = 48800

2. 15.9.2011 = 36% of 365504 = 131581 = 146400 (97600+48800)

3. 15.12.2011 = 75% of 365504 = 274128 = 305250 (158850 + 146400)

4. 15.3.2012 = 365504 = 365504 = 325250 (20000+305250)

Interest U/s 234c

1. 1% for 1 month X (365504-325250)= 402

(Rounded off to Rs. 40200)

since advance tax paid during the year is less than 90% of advance tax payable, Interest u/s 234B shall also be payable @ 1% per month or part of the month starting from 31st march 2012 upto the date on which return was filed,

1 Like

Ninad Pandit (CA Final Student) (254 Points)
Replied 04 May 2012

Agree with Mr. Akshay.

Dear Mr.Arvind, your calculation is wrong.

1 Like

bharat kumar (manager-finance) (27 Points)
Replied 05 May 2012

Tax on income declared of 1182860 = 365504

Advance tax payable upto Advance tax paid

1. 15.6.2011 = 15% of 365504 = 54826 = 54826

2. 15.9.2011 = 45% of 365504 = 164477 = 109651 (109651+54826)

3. 15.12.2011 = 75% of 365504 = 274128 = 109651 (164477 + 109651+54826)

4. 15.3.2012 = 365504 = 365504 = 91376

just check whether my calculation is right ????

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Anju Mohan (CA Final Student) (27 Points)
Replied 05 May 2012

I agree with Mr. Akshay.

The proviso to section 234C states that, if the advance tax paid by the company on its current income on or before 15th June or 15th september is not less than 12% or 36% as the case may be, the company need not pay interest on the amount of shortfall on those dates. In the given case, the advance tax paid by the company on the above mentioned due dates is not less than 12% or 36% respectively. Hence, no interest need to be paid on the shortfall on 15th June and 15th september. However, interest @ 1% calculated for 1 month need to be paid on the amount of shortfall for 15th March, which amounts to Rs. 402.