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Incorrect interest calculation

Shivshankar (a c.a student) (229 Points)

16 March 2013

In ITR4S excel sheet provided by Income Tax Department i found the following problem:-

As per my calculation:-

Incoem under th head:-

Business u/s 44AD :- Rs.14917/-

Salary:-Rs.171655/-

Other Sources: Rs.229127/-

Gross Total Income- Rs.415699/-

80C Deduction : Rs. 100000/-

Total Income : Rs.315699/-

Tax Payable (Senior Citizen) = Rs.6767/-

TDS Deducted = Rs.1195/-

Tax Payable = (6767-1195) = Rs.5572/-

Interest u/s 234A (1/8/2012 to 18/03/13) i.e for 8 Months = Rs.448/-

But as per ITR4S excel sheet of Income tax department Interest calculated u/s 234A is Rs.301/-

Now what to do for such incorrect calculation?

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4 Replies

Hanish Chaudhary (Chartered Accountant) (333 Points)
Replied 16 March 2013

@ Shiv Shankar

I think, there are following 2 reasons for difference in interest calculation:

1. You are calculating interest U/sec 234A for 8 months i.e from 01.08.2012 till date. However, the income tax excel utility is calculating interest for 7 months i.e from 01.09.2012 till date. This is done because the due date for assessee who were required to file their return by 31st July, 2012 was extended to 31st August, 2012 by virtue of notification "Order [F.NO. 225/163/2012/ITA.II], dated 31-07-2012"

2. You are calculating interest on the whole of tax payable. However, the income tax utlity is ignoring the tax on income U/Sec 44AD by virtue of Sub section 4 of Section 44AD. It is calculating interest on tax of other sources except 44AD income.

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Shivshankar (a c.a student) (229 Points)
Replied 17 March 2013

Thanks for your valuable reply but sir also as per your suggetion Interest amount getting defer as per ITR 4S excel sheet.

Hanish Chaudhary (Chartered Accountant) (333 Points)
Replied 19 March 2013

@ Shiv Shankar

(Sorry for delay reply)

Yes, u r right... even i m not able to match the interest charged by xml sheet.. actually there are various opinions about calculation of interest when presumptive income is taken. As stated above, by virtue of Section 44AD Sub Section 4, income Under this section shall be ignored. However, the modus operandi differes with regards to calculation, some completely ignore it, some work out the proportionate tax and subtract it from Tax payable for interest calculation. So that might be leading to some difference. In my opinion, correct interest should be 283/-.. however you can go with what xml file is suggesting bcoz the amount is not material as such

Hanish Chaudhary (Chartered Accountant) (333 Points)
Replied 19 March 2013

@ Shiv Shankar

I am sorry. I made a minute mistake. Interest U/Sec 234A applies to presumptive income also. Sub Section 4 of Section 44AD also exempts interest U/Sec 234B and 234C. I am sorry.