Section 234 Intrest Imposement by Income Tax Department. Intrest is Imposed when the Asseessee does not comply with Income Tax Regulations. You have to pay Intrest based on section 234. Intrest will be imposed by following three ways. They are U/S 234A, 234B, and 234C. Here we know about U/S 234ABC Interest Calculation With Examples.
What is 234A,234B and 234C :
234A: Default in a filing of Income Tax Returns.
234B: Default in payment of Advance Tax.
234C: Deferment (Tax Difference) of Advance Tax
234ABC Interest Calculation With Examples:
Interest u/s 234A calculated:
The Intrest calculated on the outstanding tax payable
Example: Let be the outstanding tax is 25000 and you file your return on 25th Dec Instead of 10th July
Intrest = 100000 x 1% x 6Months
(Note: 15 Days and Above can be calculated as one Month)
Interest u/s 234B calculated:
Liability U/S 234B arises when there is a delay in payment of Advance Tax. Intrest U/S 234B Applicable.
- Tax Liability net off TDS for the Financial year is 10000 and you did not pay Advance Tax.
- Rate of Intrest 1 on Assessed tax less Advance Tax
Example: Sravani Tax Liability is 30000 Sravani paid the amount on 12th July no tax was deducted at source in her case Sravani tax liability is more than 10000 she was liable to pay Advance tax. Advance Tax liability 5000 paid
Intrest calculation : (30000-5000) x 1% x 4 (no of Months)
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Interest u/s 234C Calculated:
Intrest for late payment is at 1% on the amount of Tax due calculated from the Individual cut off dates till the date of actual payment of outstanding taxes due dates
- June 15th
- September 15th
- December 15th
- March 15th
1st Trimester Intrest : [ Advance Tax Payable – Advance Tax Paid] x 1% x 3months
2nd,3r & 4th Trimester : [Cumulative Advance Tax Payable – Advance Tax Paid] x 1% x 3months
What is Advance Tax:
You need to pay advance tax if you are a salaried taxpayer with other sources of income like interest on deposits and your tax liability for the year exceeds Rs.10000 after your employer has deducted the TDS. You pay this tax in the financial year preceding the assessment year in three installments and the due dates are 15 September, 15 December and 15 March.
What is Self-Assessment Tax:
This tax is paid in the assessment year before filing the IT returns. If during the calculation of your tax liability, you realize that some tax is still due after taking into account the TDS ad advance tax, then you pay Self-Assessment tax. There is no specified date for paying this tax and is done by filling a tax challan ITNS 280 at specified bank branches or online.