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Doubt on 234b and 234c

CA Vanamala Phani Kumar (Proprietor of M/s Vanamala and Co) (972 Points)

22 August 2012

We are knowing that 234B and 234C are calculated for failure of payment or non payment of 90% of assessed Tax as advance tax.

If Assessed Tax exceed Rs.10,000 during year

My doubt is Assessed tax means Tax liability of Assessee Before TDS or After TDS.???????????

Please clarity with exemples if possible.

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10 Replies

Varshit Shah (Self Employed) (676 Points)
Replied 22 August 2012

For 234B : 1% x (Assessed Tax - Advance Tax) x No.of Months delayed Assessed Tax = Tax on Total Income Less: TDS / TCS Less: DTAA relief u/s 90/90A/91 Less: MAT Credit allowed to be setoff (In short it is basic S.A.Tax before adding Int.) 234C : Assessed Tax = Tax on Total Income Less: TDS / TCS Less: DTAA relief u/s 90/90A/91 Less: MAT Credit allowed to be setoff

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ALPESH KUMAR (SUPRITENDENT) (140 Points)
Replied 22 August 2012

234 b is calculated on assessed tax as determined by the IT department. Whereas, 234c is calculated on tax on returned income. In both the cases Advance tax and TDS will be deducted from the tax for the purpose of calculating the interest

PASUPATHY PARAMAGURU (CA FINAL) (286 Points)
Replied 22 August 2012

DEAR PHANI KUMAR VANAMALA,

For Short Payment of advance tax by more than 10% or failure to pay advance tax, interest shall be payable on the amount of shortfall

(i.e) Assessed Tax - Advance tax paid - TDS - TCS - Double Taxation Relief U/s.90, 90A or 91 - Tax Credit for MAT u/s 115JAA (for companies)

@ 1% for every month or part thereof, from April 1 of the assessment year to the date of determination of total income u/s 143(1) and where a regular assessment is made, to the date of such regular assessment.

Where the amount of shortfall has been paid by way of self assessment tax u/s140-A, interest shall be payable on such amount from April 1 of the assessment year to the date of payment only.

NOTE:-

1) It may be noted that the interest u/s.234B & 234C shall not be payable if the advance tax payable is less than Rs.10,000/-

2) For the Purpose of Calculating interest the amount of shortfall shall be rounded off to the nearest Rs.100/-

3) Interest u/s.234C payable even in cases where the assesse fails to pay advance tax at all or where the assesse deposits the entire tax by way of 3rd instalment.

PASUPATHY PARAMAGURU (CA FINAL) (286 Points)
Replied 22 August 2012

" Assessed Tax " means tax on the total income determined u/s.143(1) or on regular assessment u/s 143(3) (which includes tax determined on applicable of section 115J/115JA i.e MAT

CA Vanamala Phani Kumar (Proprietor of M/s Vanamala and Co) (972 Points)
Replied 22 August 2012

My doubt is not on which amount interest calculated as per 234B and 234C........!!!!!

234B &C are attracted if Assessed Tax less TDS is Less than Rs.10,000.(i.e., Tax liability Before TDS is more than Rs.10,000

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PASUPATHY PARAMAGURU (CA FINAL) (286 Points)
Replied 23 August 2012

Originally posted by : PHANI KUMAR VANAMALA
	My doubt is not on which amount interest calculated as per 234B and 234C........!!!!! 234B &C are attracted if Assessed Tax less TDS is Less than Rs.10,000.(i.e., Tax liability Before TDS is more than Rs.10,000

INTEREST U/S 234B & C SHALL NOT BE APPLICABLE IF ASSESSED TAX LESS TDS IS LESS THAN Rs.10,000/-

For Example : Assessed tax = 11,990

Less: TDS = 2,000

For the Balance Tax of Rs.9,990/-, Interest U/s.234B & 234C is not applicable.

INTEREST WILL ATTRACT ONLY IF ASSESSED TAX - TDS IS MORE THAN Rs.10,000/-

For Example : Assessed tax = 11,990

Less:TDS = 1,900

For the Balance Tax of Rs.10,090/-, Interest U/s.234 B & 234C is applicable.

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YOGESH UDHOJI (Service) (22 Points)
Replied 27 September 2013

Dear All,

I have done tax computation for normal tax and MAT, MAT is higher than normal tax and hence i am paying MAT. While I am getting a refund under normal tax and under MAT i am short on tax liablity and hence need to pay tax. Whether section 234 B and 234 C will be applicable

nisarg shah (Proprietor) (37 Points)
Replied 23 November 2013

Greeting to all

This might be a challenging question for some.

My query is that suppose a tax payer (Non corporate) had to pay for eg. Rs. 1,00,000 (inclusive of edu. cess) as tax (consider that no advance tax was paid on any of the due dates). Assessee files his return in the month of july11 (considering he not liable to audit) he would be obliviously be liable for interest under 234b & 234c in this case. This shall add upto as under

234 B

100000 * 4% =4000

234 C

30% of 100000 = 30000 * 3% = 900

60% of 100000 = 60000 * 3% = 1800

100% of 100000 = 100000 * 1% = 1000

Total = 3700

So total liability of the assessee in the month of july 11 is 1,00,000+4000+3700=1,07,700

But the assessee paid only Rs. 1,05,000 in month of july 11

Now a demand notice arrives some time in month of dec 11. Will interest component of 234B change in this case?? In simple language will assesssee have to pay more than Rs.2700 (107700-105000) ??

if yes, then why does government say that the interest under section is 234 is charged at simple interest as in this case assessee has clearly paid his tax component plus some of the interest part.

Plz ans with a link or attachment that would support your ans.

Thanks for your valuable time.

Regards

Nisarg

Varshit Shah (Self Employed) (676 Points)
Replied 23 November 2013

Hi Nisarg ,

Go through section 140A, which is a section for self assessment tax. In this section it is clearly mentioned that if assessee makes short payment of tax , then this amount will be first adjusted against interest portion , and shortfall will be construed as basic tax pending , therefore it is also subject to interest u/s 234. Hence whatever demand you have received is valid as per law , and such interest is simple interest only.

I hope you got ur query solved.

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