Interest under section 234 A, B, C of the Income Tax Act

Section 234 A, B, C of the Income Tax Act deals with the different penalty provisions for non-payment of Income Tax. Tax should be paid proportionately throughout the year rather in total at the time of filing of return. Tax has to be paid in full. Returns should be filed within the specific dates. In case of any failure, penalties under sections 234 A, 234 B, 234 C are imposed.

Section 234 A : Section 234 A of the Income Tax Act  deals with  interest payable for default in case of furnishing the return of income. It states that when return is furnished late, the assessee has to pay simple interest @1% every month or part of a month. It shall be payable for the period starting from the date immediately after the due date till the date of actual furnishing of the return. When no return is furnished, interest shall be payable till the end of the Assessment Year on the amount of shortage in total income tax which is to be paid by the assessee.
The Due Dates for Filing of Returns is 30th September for non corporate assessees whose accounts need to be audited and 31st July for salary holders and other non corporate assessees.

Section 234 B: Section 234 B of the Income Tax Act deals with interest payable for default in case of payment of advance tax. It states that when an assessee who is supposed to pay advance tax fails to make the payment, or pays the advance tax at the rate of less than ninety per cent of the assessed tax, he shall be liable to pay interest@1%   for each month or part of a month for a period starting from the date on which the payment becomes due on the amount of shortage in the amount paid by him.

 Section 234 C: Section 234 C of the Income Tax Act deals with interest payable for deferment of advance tax. It states that when the assessee has failed to pay tax on pro-rata basis over the course of the financial year, interest becomes payable. Assessees other than corporate have to pay advance tax if the total tax to be paid by them for the financial year exceeds Rs. 10,000/-. Such persons have to pay advance tax in three installments. Interest is payable @ 1% for 3 months on the amount of shortage of advance tax in first and second installments and 1% for one month in case of the last installment.

  • Rajbir Chawla

    The rate of interest payable is almost similar as payable to bank for CC limit. Is this deductible under the income tax Act

    • monica9

      This interest is not deductible expenditure

  • Jonathan Smith

    Income Tax Returns
    are matter of tremendous discussions these days. Some companies helps in
    this matter. Professional accountants can be hired from them.

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