4 Replies
chandan.ramsinghani@gmail.com
(116 Points)
Replied 25 September 2017
RAJA P M
("Do the Right Thing...!!!")
(128091 Points)
Replied 25 September 2017
What is Interest Penalty u/s 234C?
Income Tax Department wants you to pay your Advance Tax in 4 instalments to ease the burden of tax. These instalments must be paid on or before the due date. If you fail to do so, then tax department can impose interest penalty u/s 234C.
RAJA P M
("Do the Right Thing...!!!")
(128091 Points)
Replied 25 September 2017
Calculation of Penalty under Section 234C:
Example: Mr. Anand had a total tax payable of Rs. 72,000 and he paid Rs. 8,000 before 15th June and Rs. 15000 each in next three quarters. He had some shortfall in every instalment he paid. So by 31st of March he paid total Rs. 53,000. The remaining Rs.19,000 was paid on 10th of July next year while filing tax return.
Due to shortfall in each instalment, he was also supposed to pay interest under section 234C. The interest in his case is calculated as follows:
| Due by | Amount of Advance Tax Due | Amount of Advance Tax Paid (till date) |
Quarterly Shortfall | Default in months | Interest payable @ 1% pm |
| 15th June | 10800 | 8000 | 2800 | 3 | 84 |
| 15th September | 32400 | 23000 | 9400 | 3 | 282 |
| 15th December | 54000 | 38000 | 16000 | 3 | 480 |
| 15th March | 72000 | 53000 | 19000 | 1 | 190 |
| Total | 1036 | ||||
He is also liable to pay interest u/s 234B as he failed to pay 90% of Assessed Tax by 15th March. Interest is calculated as follows:
| Due by | Amount of Advance Tax Due | Amount of Advance Tax Paid (till date) |
Quarterly Shortfall | Default in months | Interest payable @ 1% pm |
| 31st March | 72000 | 53000 | 19000 | 4 | 760 |
So total interest payable by Mr. Anand u/s. 234 B&C will be Rs. 1,796/- (1036+760)
CA Pratik Gelda
(Chartered Accountant)
(50 Points)
Replied 26 September 2017
You can refer to this article. It has elaborately discussed interest under section 234C.
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