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Interest calculation for advance tax

Y.RAMA KRISHNA (EXECUTIVE ACCOUNTS) (45 Points)

01 June 2012

Sir,

I want to know the interest calculation under sec 234 b and c while making Income tax computation at the end of 2012 march financial year for corporates.

Regards

Rama Krishna.

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2 Replies

VALLABH SONECHA (Practicing Chartered Accountants) (73 Points)
Replied 01 June 2012

Advance tax due dates for corporates are:

15th june: 15% of assesed tax

15th Sept: 45% of assesed tax

15th dec: 75% of assesed tax

15th March: 100% of assesed tax

Lets assume assessed tax to be "Z" & the total of advance taxes paid upto relevant dates be A,B,C& D which means that B indicates advance tax paid on 15th june & 15th sept also)

So interest u/s 234C shall be calculated as

{((Z*15%- A)*1%*3)+((Z*45%-B )*1%*3)+((Z*75%-C )*1%*3)+((Z*100%-D )*1%*1)}

Interest calculation U/s 234B:

90% of the assessed tax should have been paid before 31st March.

So if the advance tax paid is less than 90 % of assesed tax then interest shall be charged at 1% p.m on balance tax payable ,upto the date of payment of tax.

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Giridhar S Karandikar (Team Lead) (7548 Points)
Replied 07 June 2012

One point to be noted in the above is that from the 90% assessed tax, TDS if any should be reduced first & after that on the balance amount interest under the two section needs to be calculated