Interest u/s 234A: If the assessee

filed return of Income belatedly

then the Interest u/s 234A is
chargeable .
The rate of Interest is 1% p m. part
of the month also included.
Chargeability: Tax payable – Prepaid
As per Board’s circular No.17/2019
dated Monetary limits for filing of
appeals by the Department before
ITAT, High Court and Supreme Court
tax effect should be more than
Before ITAT : Rs. 50,00,000
Before HC :Rs.1,00,00,000
Before SC : Rs.2,00,00,000
Interest u/s 234B: Non payment or short
payment of advance tax payable by the
assessee. (tax payable –TDS)
Rate of interest 1% pm.
To be chargeable from the 1st day of the
relevant A.Y.
If tax payable –TDS is less than Rs.10000/-
Interest u/s 234B is not applicable.
Similarly if the assessee paid 90% of the
amount (i.e Tax payable – TDS) interest u/s
234B is not applicable.
Interest u/s 234C: Where the
Assessee fails to pay any
installment of Advance tax or pay
less amount than prescribed, he
shall be liable to pay interest u/s
234C
Advance tax schedule
15% of tax payable before 15.06
45% of tax payable before 15.09
75% of tax payable before 15.12
100% of tax payable before 15.03
of the Previous year.
If the assessee fail to pay the advance
tax as per the schedule either non
payment or short payment the
interest u/s 234C is applicable.
Interest u/s 234D:Refund must have
been granted to assessee u/s 143(1)
(a) No refund due or (b) Refund is
reduced on Regular assessment u/s
143(3)
Amount of Interest: Excess Refund
made u/s 143(1) X0.5%XNo. Of
months or part thereof till date of
such assessment.
Interest u/s 220(2): Failure or delay
in payment of tax demanded u/s
156 of I.T.Act 1961.
After the expiry of 30 days till the
date of actual payment.
On the amount specified in the
Demand Notice u/s 156.
Rate of Interest 1% pm
Interest u/s 201(1A): Failure to
deduct tax at source or delay in
remitting the TDS.
From the date on which tax was
deductible till the date of actual
payment
Amount of tax deductible or
deducted
Rate of Interest 1% pm
Interest u/s 206C(7): Failure to collect
or delay in remitting tax deducted by
seller for responsible for collecting tax.
From the date on which tax was
collectible till the date of actual
payment.
Amount of tax collectible or collected.
Rate of Interest 1% pm.
Interest on Refunds U/s 244A:
If the refund is out of any tax paid TDS or TCS or
Advance tax during the financial year, the assessee shall
be entitled to interest on refund.
Period of interest: Refund out of Advance tax or
TDS/TCS- For every month or part of month from 1st
April of A.Y. to the date on which refund is granted.
Period to be excluded: in the delay in the refund
proceeding are due to reasons attributable to the
assessee, such delay shall be excluded from the period
of interest.
Rate of Interest: 0.5% per month
Exception: No interest shall be payable if the refund is
less than 10% of the amount of tax determined.
Workshop on Interest:
1.Mr.Rajesh filed his return of Income for
A.Y.2018-19 on 31.12.2018. (His account is not
subject to Audit).As per his return of Income
the tax payable along with surcharge and
education cess is Rs.2,50,000/-. There is a TDS
credit of Rs.1,30,000/-. He remitted advance
tax of Rs.95,000/- on 31.03.2018 and paid
Rs.34,000/- as self assessment tax on
31.12.2018. Compute the tax payable by the
assessee. The order u/s 143(1) was made by
AO on 05.05.2019.
Tax payable :Rs.2,50,000
Less: TDS :Rs.1,30,000
Balance :Rs. 1,20,000
Less: Advance tax :Rs. 95,000
Balance : Rs. 25,000
Add:
Interest u/s 234A : Rs. 1,250
Interest u/s 234B : Rs. 2,250
Interest u/s 234C : Rs. 5,245
: Rs. 33,745
Less: Tax paid : Rs. 34,000
Balance refundable: Rs. 265
Interest calculation u/s 234A:
Interest u/s 234A is chargeable for
belated filing of return of Income.
Due date of filing of Return of
Income is 31.07.2018 but RI filed
on 31.12.2018. Therefore 5 months
delay. Hence 234A is chargeable
for Rs.25,000 @ 5% worked out to
Rs.1,250/- (25000x5monthsx1%)
Interest calculation u/s234C:
Assessee is liable to pay advance to the
tune of Rs.1,20,000/- in four installment i.e
on 15.06.2017 15% of 1,20,000=22,500,
45% before 15.09.2017 i.e 45% of
1,20,000=54000 and 75% of 1,20,000 i.e
75% of 1,20,000 =90,000 before
31.12.2017 and 100% before 15.03.2018.
But the assessee paid Rs.75000/- on
15.03.2018. Therefore 234C is chargeable
as under
For first installment :22,500 X 3
months x 1% =675, for Second
Installment: Rs.54,000x3%=1620, for
3rd installment Rs.90000x3%=2700
and for 4th installment (1,20,000-
95000= 25000x1%)=250 Total
Interest u/s 234C is
(675+1620+2700+250)=Rs.5245
Calculation of Interest u/s 234B:
Balance tax payable at the end of Financial
year (Tax payable –TDS&AT) is Rs.25,000.
Interest u/s 234B is chargeable from
01.04.2018 to 31.12.2018 (SAT paid) i.e
25000x9x1%=2250
(Note In this case Interest u/s 234B
calculated up to Tax paid period for the
reason that the assessee paid excess tax on
31.12.2018)
An assessee filed return of income for A.Y.2018-19
on 31.07.2018 wherein the tax payable by him was
Rs.2,50,000/- He paid Advance tax of Rs.3,00,000/-
on 15.03.2018. The order u/s 143(1) was made on
15.04.2019. Compute the tax payable/ refundable
by the assessee. (Subsequently the order u/s
143(3) made on 15.01.2020 wherein the AO raised
demand of Rs.1,500/- Calculate interest 234D also)
(In this case apparently noticed that there is a
refund due to the assessee. But the assessee failed
to pay advance tax as per the installment. Hence
interest u/s 234C is to be calculated and the
computation made accordingly.)
Tax payable :2,50,000
Less: AT paid :3,00,000
Refundable : 50,000
Less: Interest 234C : 10,125 (*)
Balance Refund : 39,875
Add: Interest u/s 244A : 2,587
Refundable : 42,462
(*) calculate the same as home work
Interest u/s 234D for Rs.42462 from 15.04.2019 to
15.01.2020 for 10 months @0.5% worked out to
Rs.2123/- (2123 + 1500=3623 is payable by the
assessee)
Interest u/s 244A calculation
Period eligible: 01.04.2018 to
15.04.2019 = 13 months
Rate of Interest: 0.5% per month
Amount qualified: Rs.39,875/-
rounded to Rs.39800/-
244A interest : 39800X0.5X13=2587
M/s ABC Ltd filed its return of Income
for A.Y.2018-19 on 31.10.2018. The
Return of Income processed u/s
143(1) on 31.03.2019 and the same
was served on the same day wherein
the AO raised demand of Rs.12,500/-
and the assessee paid the same
30.11.2019. Calculate Interest if any
payable by the assessee in the above
situation.
In this case the assessee paid the demand as
determined by the AO but paid belatedly which
attracts interest u/s 220(2) of IT Act. Actually
the demand should be paid within 30 days but
the assessee paid late by 7 months. Hence
interest 220(2) worked out to ( 12,500X7/100)
Rs.875/- payable by the assessee.
Interest u/s 220(2) is chargeable in this case to
the tune of Rs.875/-.
An Indian company filed its return of
Income for A.Y.2018-19 on 30.12.2018
wherein the tax payable worked out to
Rs.3,00,000/-. The company paid Advance
tax as under: On 15.06.2017 :40,000/- on
15.09.2017 Rs.40,000/- on 17.12.2017
Rs.80,000 and on 15.03.2018 Rs.1,20,000/-
The company also paid self assessment tax
of Rs.25,500/- on 30.12.2018. Calculate the
interest chargeable to the assessee
Tax payable :3,00,000
Less: Advance tax paid :2,80,000
Balance : 20,000
Add: Interest 234A: 400
(20,000X2/100)
Add: Interest 234C: 6350 : 6,750
: 26,750
Less: SA Paid : 25,500
Balance Payable : 1,250
Answer to the question is Rs.6,750/- (400+6350)
The advance tax paid is more than 90% of the
tax payable interest u/s 234B is not Chargeable.
Interest calculation u/s 234C
Tax payable :3,00,000
Ist Installment due : 45,000
(15% of 3,00,000)
Less: Tax paid :40,000
Default amount : 5,000
(a) Interest u/s 234C : 150 (3% of 5000)
upto 2nd Installment due :1,35,000 (45% of 3,00,000)
Less : Tax paid : 80,000 (40000+40000)
Default amount : 55,000
(b) Interest u/s 234C :1,650 (3% of 55,000)
IIIrd Installment due : 2,25,000 (75% of 3,00,000)
Less : Tax paid : 80,000 (3rd installment paid
belatedly i.e. on 17.12.2017 hence the same was not
considered)
Default amount :1,45,000
(c ) Interest u/s 234C :Rs.4,350/- (3% of 145000)

IV th Installment due :3,00,000

Less: Tax paid :2,80,000
Default amount : 20,000
(d) Interest u/s 234C :200 (1% of 20000)

Total Interest u/s 234C= 150+1650+4350+200=6,350