Rahul (Student) (112 Points)
09 November 2010Under 234A Interest is payable on assessed tax minus advance tax/tds if the return is filed beyond the due date.
If this interest was not paid at the time of filing return, then would interest of 1% be liable to be paid on this interest till the date of assessment order?
Similar question for 234C.
So if the due date was 30.9.08 and the order was passed on say 30.9.10, would interest of 1% have to be paid on this interest u/s 234A and 234C for an additional 24 months?
Arvind Sharma
(ACA)
(1432 Points)
Replied 09 November 2010
no...
Int u/s 234A/B/C is always computed on Tax Payable after considering TDS & Advance Tax....
Rahul
(Student)
(112 Points)
Replied 09 November 2010
To make things more clearer, let me add some figures to the question.
Say total tax payable was 7.5 lakh and advance tax paid was only 475000. No TDS involved.
Assume the return was filed 1 months after the due date, so interest u/s 234 A = 275000 * 1% = 2750
At the time of filing return, the person in question paid 2,75,000 as self assessment tax, but did not pay the interest of 2750.
Also assume that in the above case, interest u/s 234c was 20,000.
This interest was also not paid by the assessee at the time of filing self assessment tax.
Interest u/s 234B till the month of filing return was 19250, which was also not paid at the time of self assessment tax.
Say the assessment order was completed 24 months after filing the rerurn.
Would interest of 1% for 24 months also be liable to be paid on 2750 + 20,000 + 19250 ?
Arvind Sharma
(ACA)
(1432 Points)
Replied 09 November 2010
actaully, adjustment of self assessment tax paid shall be made first against Int due i.e. 2750+20000+19250, and then balance shall be adjusted against tax liability, now, the short amount will be equal to that int amount, and so that amount is NOT INTEREST but it is a DUE TAX, and hence int @ 1 % shall be payable on that amount which although equal to int BUT NOT INTEREST...
I hope you have got my point...
Rahul
(Student)
(112 Points)
Replied 09 November 2010
| Originally posted by : Arvind | ||
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actaully, adjustment of self assessment tax paid shall be made first against Int due i.e. 2750+20000+19250, and then balance shall be adjusted against tax liability, now, the short amount will be equal to that int amount, and so that amount is NOT INTEREST but it is a DUE TAX, and hence int @ 1 % shall be payable on that amount which although equal to int BUT NOT INTEREST...
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I think I did get your point Arvind. Many thanks- just a small clarification.
2750+20,000+19250 becomes due tax- so the interest for 1% for 24 months comes under 234B then? Which would be Ten thousand and eighty.
Arvind Sharma
(ACA)
(1432 Points)
Replied 09 November 2010
Let me again clear you Dear Sweety
Tax Payable 275000
Int u/s 234A 2750
u/s 234B 20000
u/s 234C 19250
Total 2792000
Self Assessment Tax Paid 2750000
Now the appropriation of Self Assessment Tax Paid shall be as below:-
Rs. 2750 for Int u/s 234A
Rs. 20000 for Int u/s 234B
Rs. 19250 Int u/s 234C
Balance Rs, 2708000 shall be appropriate toward Tax Liability of Rs. 2750000, and hence short tax paid will be Rs. 42000 (2750+20000+19250)
Hence, interest @ 1% shall be payable on Tax Payable which is Rs. 42000
Arvind Sharma
(ACA)
(1432 Points)
Replied 10 November 2010
no.. it is contain in the Act., Explanation to Sec 140A...
Vivek
(Finally passed CA Final...!!!!!)
(1097 Points)
Replied 10 March 2011
Dear All,
If a Company was incorporated in August, whether it will be pay interest under section 234C for non-payment of advance tax for the first quarter when it was not even in existence.
Would be greatful to the members if I could get some CBDT circular, notification etc on the relevant issue.
Thanks.
Vivek
CAclubindia
