ADVANCE TAX theTAXtalk INTEREST ON DEFAULT IN PAYMENT OF

INTEREST ON DEFAULT IN PAYMENT OF ADVANCE TAX U/S 234C

13th March 2018

ADVANCE TAX

Section 234C– Interest payment in case of delay in the payment of advance tax.

Interest under section 234C is levied, if advance tax paid in any installment is less than the required amount.

Interest under section 234C in case of deferment of different installments of Advance Tax is levied in as under:

Also Advance Tax is paid on or before 15th June is less than 12% of Assessed Tax
The Advance Tax is paid on or before 15th September is less than 36% of Assessed Tax
If Advance Tax is paid on or before 15th December is less than 75% of Assessed Tax
Also Advance Tax is paid on or before 15th March is less than 100% of Assessed Tax

Also the amount advance tax paid on or before March 15 is less than 100%, Simple interest @ 1% is chargeable for presumptive taxation.

Amount on which interest is payable=Tax on total income declared in the return filed.

(Less) Total of Tax deducted/collected at source

If (Less) relief/deduction of tax under sec 90 or 91

Also (Less) relief of tax claimed under sec 90A

(Less) Tax credit under sec 115JD

(Less) Amount of advance tax paid on or before

March 15 of the financial year immediately

Preceding the relevant assessment year.

Waiver or reduction of interest under section 234C

The interest under section 234C shall be reduced or waived by the chief commissioner/Director general subject to certain conditions are:

The relevant income is disclosed in a return of income furnished in the same Previous year or disclosed to assessing officer.
Tax attributable to such income has been paid

The interest under section 234C shall be reduced or waived in respect of the period mentioned in that section.

The quantum of interest to be reduced or waived shall be the difference between:

Interest computed for the period mentioned inclusive of the relevant income
Interest computed for the same period with reference to the tax on the total income as reduced by the relevant income.

234C. (1) Where in any financial year,—

[(a) An assessee, other than [the assessee referred to in clause (b)], who is liable to pay advance tax under section 28 has failed to pay such tax or—

(i) the advance tax paid by such assessee on its current income on or before the 15th day of June is less than fifteen per cent of the tax due on the returned income or the amount of such advance tax paid on or before the 15th day of September is less than forty-five per cent of the tax due on the returned income or the amount of such advance tax paid on or before the 15th day of December is less than seventy-five per cent of the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of one per cent per month for a period of three months on the amount of the shortfall from fifteen per cent or forty-five per cent or seventy-five per cent, as the case may be, of the tax due on the returned income;

(ii) the advance tax paid by the assessee on the 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 one per cent on the amount of the shortfall from the tax due on the returned income:

Provided that 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 twelve per cent or, as the case may be, thirty-six per cent 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;]

(b) [an assessee who declares profits and gains in accordance with the provisions of sub-section (1) of section 44AD or sub-section (1) of section 44ADA as the case may be], who is liable to pay advance tax under section 208 has failed to pay such tax or 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 one per cent on the amount of the shortfall from the tax due on the returned income:]]

Provided that nothing contained in this sub-section shall apply to any shortfall in the payment of the tax due on the returned income where such shortfall is on account of under-estimate or failure to estimate—

(a) The amount of capital gains; or

(b) Income of the nature referred to in sub-clause (ix) of clause (24) of section 2[or]

[(c) 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]]

[(d) income of the nature referred to in sub-section (1) of section 115BBDA,]

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 installments of advance tax which are due or where no such installments are due, by the 31st day of March of the financial year: