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Sec 234b and sec 234c

Shallu Gupta (article ) (56 Points)

15 June 2016

what is the difference between sec 234b and 234c I am not able to differentiate between theses two. as in both advance tax liability is there but no advance tax is paid . GETTING CONFUSED WHICH TO APPLY AND WHERE . I AM DOING STATUTORY AUDIT OF PRIVATE LIMITED COMPANY AND I HAVE TO DO ADVANCE TAX WORKING.

AND IS THERE ANY ORDER TO FOLLOW THESE SECTIONS?

PLEASE GUIDE ASAP

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10 Replies

Senu Reddy (ca final) (291 Points)
Replied 15 June 2016

Interest is payable under section 234C when a taxpayer has not paid advance tax as per the due dates or has underestimated installments of advance tax.

interest is payable under section 234B when there is a default in payment of Advance Tax.

It is mandatory to pay advance tax in every case where the advance tax payable is Rs 10,000 or more. All heads of income are to be included for the purpose of calculation of Advance Tax.

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NV KIRANKUMAR REDDY (student) (123 Points)
Replied 15 June 2016

234B is for failure to pay 90% of Assessed Tax

Senu Reddy (ca final) (291 Points)
Replied 15 June 2016

Section 234B – For making default in payment of advance tax :

1) As per this section assessee is liable to pay interest @ 1% for every month or part of a month If the total amount of advance tax paid and TDS is lease than 90% total tax liability for the previous year.

Amount liable for interest

Interest under section 234B is levied on the amount of unpaid advance tax. If there is a shortfall in payment of advance tax, then interest is levied on the amount by which advance tax is short paid. The amount of unpaid/short paid advance tax is computed as follows :

Particulars	Amount
Assessed tax *()**	XXXXX
Less : Advance tax paid (if any)	(XXXXX)
Amount of unpaid/short paid advance tax	XXXXX

(*) Assessed tax means the amount of tax as determined under section 143(1) and where regular assessment is made, the tax on total income as determined under such regular assessment as reduced by tax deducted/collected at source, relief/deduction of tax claimed under various sections like sections 90/90A/91 and tax credit claimed under section 115JAA/115JD.

2. Period for calculation :

This interest should be calculated and paid for a period commencing on the 1st day of April of the assessment year to date of determination of total income u/s 143 or date of regular assessment u/s 143. This would be calculated on the amount of tax determined under this sec less advance tax TDS paid on thereof.

Example

Mr. Khushal is running a provision shop. Tax liability of Mr. Khushal for the year is Rs. 38,400. He has not paid any advance tax till 31st March. Entire tax was paid by him at the time of filing the return of income. Will he be liable to pay interest under section 234B?

Answer

Interest under section 234B is levied in following two cases:

When the taxpayer has failed to pay advance tax; or
Where the advance tax paid by the taxpayer is less than 90% of the assessed tax.

As per section 208 every person whose estimated tax liability for the year is Rs. 10,000 or more, shall pay his tax in advance in the form of “advance tax”.

The tax liability of Mr. Khushal is Rs. 38,400 (i.e., not less than Rs. 10,000), thus, he is liable to pay advance tax. However, he has not paid any advance tax and, hence, he will be liable to pay interest under section 234B (provisions relating to period of interest, rate of interest and amount on which interest is levied are discussed in later part).

C). Section 234C – For deferment of advance tax :

Section 234C mandates periodic payment of tax during the year. If you fail to pay the advance tax as per the regular time intervals said by the act then sec 234C comes into picture.

Time intervals for payment of advance tax are as follows :

1) If the assessee fails to pay the advance tax as per above stated slabs then he is liable to pay 1% p.m. for a period of 3 months for every deferment.But, for last instalment on 15th March, interest would be 1% for 1 month only.

2) Interest is calculated on the difference between the amount paid and amount of payable.

Status	By 15 th June	By 15 th Sept.	By 15 th Dec	By 15 th March
Non-Corporate taxpayers	Nil	Upto 30% of advance tax	Upto 60% of advance tax	Upto 100% of advance tax
Corporate taxpayers	Upto 15% of advance tax	Upto 45% of advance tax	Upto 75% of advance tax	Upto 100% of advance

Shallu Gupta (article ) (56 Points)
Replied 15 June 2016

DEFAULT in the sense of 90% limit ?

and in some article interest under sec 234B is calculated on assessed tax less advance taxand on some 90% of assessed less advance payment , hence what is the correct way of doing this?

Senu Reddy (ca final) (291 Points)
Replied 15 June 2016

it is Assessed tax - Advance tax

where Assessed tax means the amount of tax as determined under section 143(1) and where regular assessment is made, the tax on total income as determined under such regular assessment as reduced by tax deducted/collected at source, relief/deduction of tax claimed under various sections like sections 90/90A/91 and tax credit claimed under section 115JAA/115JD.

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Shallu Gupta (article ) (56 Points)
Replied 15 June 2016

thank you really help ful just one doubt , if 90% is required to be paid shall we need to pay interest on 10% as well ? in case of failure of 90% limit and not failure of 9)% please explain .