Income tax returns and penal interests

Updated on 23-01-2014 ,  An individual is required to file his return of income for any previous year upto 31st July of the assessment year u/s 139(1) of the Income Tax Act, 1961 (The Act). Timely filing of return avoids penal interest u/s 234A and also helps you to carry forward the losses to next years. The advance tax is based on the concept of “pay as you earn” as the same is payable by the individual during the financial year in respect of his estimated income in three instalments, if the tax on such estimated income after deducting TDS exceeds Rs. 10,000. If the advance tax is not paid in time then interest u/s 234B & 234C will be charged as per the provisions of the act. What does the provision say??? Interest u/ 234A for default in furnishing the return:

  • When the assessee fails to furnish return within stipulated time then interest u/s 234A is chargeable.
  • The interest is chargeable on the amount of tax determined as reduced by the advance tax & TDS.
  • Interest is charged @1% per month or part of the month from the due date of filing the return till the date of furnishing the return.

Interest u/s 234B for non-payment or short payment of advance tax:

  • Interest u/s 234B is attracted when the advance tax paid by such assessee is less than 90% of the assessed tax.
  • Interest is calculated on the amount of difference between the assessed tax and the advance tax paid.
  • Interest is charged @1% per month or part of the month from 1st April of assessment year till the date of payment of tax.

Interest u/s 234C for deferment of advance tax:

  • Interest u/s 234C is attracted for deferment of instalments of advance tax beyond due dates as prescribed by the act.
  • The interest is chargeable on the difference between the amount arrived at by applying the specified percentage of tax on returned income and the actual tax paid by the due dates.
  • Interest is charged @1% per month for the period of 3 months on the amount of shortfall.
  • Interest is charged @1% for 1 month for the last instalment of 15 March.

Assessed tax is total tax as reduced by the amount of TDS. Dear friends, we at have the expertise in individual taxation. is here to free you from all your tax worries including your return of income.We just need your salary certificate and your income details to file your return of income. We also provide full year tax support and efficient tax planning. Please send your salary certificate at the earliest for financial year 2009-10 (March 2010) to file your return of income, if you have not filed the same yet. You also contact us and avail our offers “Start early March 2011″ for financial year 2010-11. Join us in pursuit of simplifying individual taxation! 

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