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Interest u/s.234C - Applicability

Janani (CA Final) (40 Points)

07 July 2010

Hi,

My client has a total income of Rs.3,77,890/- for which the net tax payable comes to Rs.30,465/- (incl. cess @ 3%). The TDS deducted as per Form 16 & 16A comes to Rs.23,787/-.The balance tax payable comes to Rs.6,,678/-. He has paid an advance tax of Rs.5,000/- on March 3rd. Now he has to pay a self assessment tax of Rs.1,678/- and file his returns for AY 2010-11. Is he liable to pay interest u/s.234B &C while remitting self assessment tax now? If so, how is it to be calculated?

Thanks & Regards - Janani

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8 Replies

Amir (Learner) (4016 Points)
Replied 07 July 2010

Dear Friend,

Finance Act(No.2) 2009 has raised the threshold for the payment of advance tax to Rs. 10,000

Hence, Interest u/s 234B &C shall not be levied in the present case.

3 Like

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Janani (CA Final) (40 Points)
Replied 07 July 2010

Originally posted by : Amir

Hi,

Thanks a lot for your reply. But when i was browsing tax calculator for AY 2010-11, it showed an interest amount of Rs.198 u/s. 234C and Rs.68 u/s.234B. So i wanted to confirm the same before declaring to my client. Is it enough if he pays a self assessment tax of Rs.1678?

Thanks & Regards - Janani
Dear Friend,

Finance Act(No.2) 2009 has raised the threshold for the payment of advance tax to Rs. 10,000

Hence, Interest u/s 234B &C shall not be levied in the present case.

Amir (Learner) (4016 Points)
Replied 07 July 2010

Absolutely, payment of Self assessment tax is enough in this case...

C.Balaji (Learner) (1867 Points)
Replied 07 July 2010

Agree with Amir bhai........

Interest u/s 234 B & C applicable only if the tax payable is Rs.10000 or more....

If its below Rs.10000/-... no interest arise....

In your case, Rs.1678/- is only payable........No INTEREST....

Janani (CA Final) (40 Points)
Replied 08 July 2010

Friends thanx a lot!!!

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Manivannan.C (article clerk - CA pcc 1st grp cleared) (80 Points)
Replied 09 July 2010

dear friends.

My view is he has to pay interest too.. As per Finance Act 2009, if the total tax liability for the

assessement year exceeds 10,000/- the assessee is liable to pay advance tax. .

Janani. in ur case ur

clients tax liability crosses 10,000/- (i.e) Rs.30,465/- in A.Y 2010-11. . . So he is liable to pay Advance Tax

Hence ur client has to pay int u/s 234B & C.. .

With regards

manivannan

Amir (Learner) (4016 Points)
Replied 09 July 2010

Hi Mani,

Pls refer Sec 209(1)(d) -

the income-tax calculated under clause (a) or clause (b) or clause (c) shall, in each case, be reduced by the amount of income-tax which would be deductible [or collectible] at source during the said financial year under any provision of this Act from any income (as computed before allowing any deductions admissible under this Act) which has been taken into account in computing the current income or, as the case may be, the total income aforesaid; and the amount of income-tax as so reduced shall be the advance tax payable.]