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Interest of Deferment of Advance Tax (Section 234C)

  1. An assessee, (other than an Eligible Assessee in respect of the Eligible Business referred to in Section 44AD or in respect of Eligible Profession referred to in Section 44ADA),

  2. Interest payable in case of Non-payment of Advance Tax by 15th March by the Eligible Assessee of the Eligible Business referred to in Section 44AD or Profession referred to in Section 44ADA [Clause (b) to Section 234C(1)]

  3. No Interest on Shortfall in Payment of Advance Tax Due on Returned Income if it is due to Under/Non Estimation of Certain Incomes [First proviso to section 234C(1)]

1. An assessee, (other than an Eligible Assessee in respect of the Eligible Business referred to in Section 44AD or in respect of Eligible Profession referred to in Section 44ADA),

who is liable to pay advance tax under section 208 has failed to pay such tax or has made late payment of advance tax, shall pay the interest under section 234C as under—

Circumstances in which
interest is payable
u/c 234C

Rate of interest

Period

Amount on which interest is
to be paid

(1)

(2)

(3)

(4)

Where advance tax paid on or before June 15th is less than 12% of tax due on returned income

Simple interest 1% p.m.

Three months

15% of Tax Due on Returned Income minus advance tax paid upto 15th June

Where advance tax paid on or before 15th September is less than 36% of tax due on returned income

Simple Interest (a 1% p.m.

Three months

45% of Tax Due on Returned Income minus total advance
tax paid upto 15th September

Where advance tax paid on or before 15th December is less than 75% of tax due on returned income

Simple Interest @ 1% p.m.

Three months

75% of Tax Due on Returned Income minus total advance
tax paid upto 15th December

Where advance tax is paid on or before 15th March is less than 100% of tax due on returned income

Simple Interest 1% p.m.

One month

100% of Tax Due on Returned Income minus total advance tax paid upto 15th March

However, if the advance tax paid by the assessee on the current income, on or before the 15th day of June or the 15th day of September, is not less than 12%, or, as the case may be, 36%, of the tax due on the returned income, then, the assessee shall not be liable to pay any interest on the amount of the shortfall on those dates.

Interest of Deferment of Advance Tax (Section 234C)

Tax Due on Returned Income :

It shall be computed as under:

Tax on returned income

Less:

  1. tax deducted and collected at source;

  2. the amount of relief of tax allowed under sections 90 and 90A and deduction from the Indian income-tax payable, allowed under section 91, and

  3. tax credit allowed to be set off under section 115JAA/115JD from the tax on the total income.

2. Interest payable in case of Non-payment of Advance Tax by 15th March by the Eligible Assessee of the Eligible Business referred to in Section 44AD or Profession referred to in Section 44ADA [Clause (b) to Section 234C(1)]

An assessee who declares profits and gains in accordance with the provisions of section 44AD(1) or section 44ADA(1), as the case may be, who is liable to pay advance tax under section 208:

  1. has failed to pay such tax or

  2. the advance tax paid by the assessee on its current income on or before the 15th day of March is less than the tax due on the returned income,

then, the assessee shall be liable to pay simple interest at the rate of 1%, on the amount of the shortfall from the tax due on the returned income.

(3) No Interest on Shortfall in Payment of Advance Tax Due on Returned Income if it is due to Under/Non Estimation of Certain Incomes [First proviso to section 234C(1)]

Nothing contained in section 234C(1) shall apply to any shortfall in the payment of the tax due on the returned income where such shortfall is on account of underestimate or failure to estimate—

  1. the amount of capital gains; or

  2. income of the nature referred to in section 2(24)(ix), relating to winning of lotteries, crossword puzzles, races, etc.; or,

  3. income under the head "Profits and gains of business or profession" in cases where the income accrues or arises under the said head for the first time; or

  4. income of the nature referred to in section 115BBDA(1), relating to receipt of dividend from domestic companies in excess of Rs.10,00,000,

and the assessee has paid the whole of the amount of tax payable in respect of income referred to in clause (a) or clause (b) or clause (c) or clause (d), as the case may be, had such income been a part of the total income, as part of the remaining instalments of advance tax which are due or where no such instalments are due, by the 31st day of March of the financial year.

 
CONTENT :  Advance Tax and Refund

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