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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 A LTD

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?

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18 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 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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CA Navin Jain (MANAGER (FINANCE & ACCOUNTS)) (11768 Points)
Replied 04 May 2012

Total TAX		Advance	Advance	Short amt	Interest
Liability		tax to be	Tax	of Advance	234C
		deposited	Deposited	tax
1182860	30%	354858	146400	208458	6253.74	3Month @ 1%
1182860	60%	709716	305250	404466	12133.98	3Month @ 1%
1182860	100%	1182860	325250	857610	8576.1	1Month @ 1%

			Total Interest Amt		26963.82

cs sharmila (company secretary) (150 Points)
Replied 04 May 2012

Thankz Navin...... Thankz for ur effort .

"234c for A LTD" - it is for corporate..... Computation will differ is it?

For Company other than comapny

15/06 upto 15% -

15/09 upto 45% 30%

15/12 upto 75% 60%

15/03 upto 100% 100%

My doubt is on calculation of Interest.......234C whether to calculate on interest for particular month and for what amount?

I also had confusion in 234B & 234C

CA Navin Jain (MANAGER (FINANCE & ACCOUNTS)) (11768 Points)
Replied 04 May 2012

		Advance	Advance	Short amt	Interest
		tax to be	Tax	of Advance	234C
		deposited	Deposited	tax
1182860	15%	177429	48800	128629	3858.87	3Month @ 1%
1182860	45%	532287	146400	385887	11576.61	3Month @ 1%
1182860	75%	887145	305250	581895	17456.85	3Month @ 1%
1182860	100%	1182860	325250	857610	8576.1	1Month @ 1%

			Total Interest Amt		41468.43

Interest under section 234B ia applicable if advance tax is deposited less than of 90% of total tax liabilty and in your case advance tax is less deposited hence interest under sec 234b would be calculated from 01.04.2012 till filing of the return of the income. Rate of Interest is @ 1% per month of part of the month.

cs sharmila (company secretary) (150 Points)
Replied 04 May 2012

ThankQ so much Navin......!!!!!

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CA Navin Jain (MANAGER (FINANCE & ACCOUNTS)) (11768 Points)
Replied 04 May 2012

Hope now you are cleared about your query.

cs sharmila (company secretary) (150 Points)
Replied 04 May 2012

Ya cleared....... and thankz a lot:)

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

Rs. 1182860 is the Amount of Declared income by A Ltd and not the tax Payable by A Ltd. The tax Payable on RS. 1182860 is Rs. 365504 and the Advance tax Installment would be

1) Rs. 54826

2) Rs. 109651

3) Rs. 109651

4) Rs. 91376

Now Mr. Navin Jain you can calculate Interest u/s 234C

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

Read this Much b4 u calculate interest.

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.

cs sharmila (company secretary) (150 Points)
Replied 04 May 2012

Date	Due date		Actual Paid	paid amt	Shortage	int in month	1% int
10-06-2011	15-Jun	54825	48800	48800	-6025	3		15.0625
11-09-2011	15-Sep	164475	97600	146400	-18075	3		45.1875
09-12-2011	15-Dec	274125	158850	305250	31125	3		-
03-02-2012	15-Mar	365500	20000	325250	-40250	1		33.54167

							Total int	93.79167

		118250	30%	354828
		EC&SHEC	3%	10646
				365504
				365500

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CA Navin Jain (MANAGER (FINANCE & ACCOUNTS)) (11768 Points)
Replied 04 May 2012

Hello, eleier i have considred the Rs. 1182860 as tax liability but its net income, hence interest amount will be come as under:-

					Short amt	whether	Interest
		Advance	Advance	% of advance	of Advance	sec 234 C IS	234C
Tax Libility		tax to be	Tax	tax	tax	Applicable
		deposited	Deposited	deposited
365504	15%	54825.6	48800	0.13	6025.6	NO	-
365504	45%	164476.7	146400	0.40	18076.7	NO	-
365504	75%	274127.8	305250	0.84	-31122.2	NO	-
365504	100%	365503.7	325250	0.89	40253.7	YES	403	1Month @ 1%

				Total Interest Amt			403