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Why is interest under 234a applicable to me?

Sanjit (not applicable) (119 Points)

16 March 2015

I self assessed my income tax and paid the taxes for PY 2013-14 online by on 27/7/14

This brought my self assessed tax liability to zero

I then generated the X M L file and uploaded to my income tax site on 31st Dec 2014

What exactly did i get chrged the interest for?

I filed ITR 4 as i have income from salary, pofession and other sources

Please tell me by when am i supposed to do these filings ans tax payments to avoid errors in the forthcoming AY

Thanks

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7 Replies

CA Rajat Bajaj (Job) (1042 Points)
Replied 16 March 2015

interest u/s 234A is due to non filing or late filing of return, in case of individual due date of filing return is 31st july of assessment year, if you have filed late return , interest will be charged, and before filing of return make sure to pay amount of tax liability with interest u/s 234B/C if any.

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Anyone knows from which AY this circular will be effective?

Circular 2/2015

F. No. 385/03 /2015-IT(B)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes (CBDT)

North Block, New Delhi
10 th February, 2015

Subject: Chargeability of Interest under Section 234A of the Income-tax Act, 1961 on self-assessment tax paid before the due date of filing of return of income- regarding

Interest under Section 234A of the Income-tax Act, 1961(hereinafter the Act) is charged in case of default in furnishing return of income by an assessee. The interest is charged at th specified rate on the amount of tax payable on the total income, as reduced by the amount of advance tax, TDS/TCS, any relief of tax allowed under section 90 and section 90A, any deduction allowed under section 91 and any tax credit allowed in accordance with the provisions of section 115JAA and section 115JD of the Act. Since self assessment tax is not mentioned as a component of tax to be reduced from the amount on which interest under section 234A of the Act is chargeable, interest is being charged on the amount of self-assessment tax paid by the assessee even before the due date of filing of return.

2. It has been held by the Hon'ble Supreme Court in the case of CIT vs Prannoy Roy, 309 ITR 231 (2009) that the interest under section 234A of the Act on default in furnishing return of income shall be payable only on the amount of tax that has not been deposited before the due date of filing of the income-tax return for the relevant assessment year. Accordingly, the present practice of charging interest under section 234A of the Act on self-assessment tax paid before the due date of filing return was reviewed by CBDT.

3. The Board has decided that no interest under section 234A of the Act is chargeable on the amount of self-assessment tax paid by the assessee before the due date of filing of return of income.

4. This Circular may be brought to the notice of all officers for compliance.

5. Hindi version shall follow.

(Sandeep Singh)
Under Secretary to Government of India