INTEREST UNDER SECTION 234 A FOR DEFAULT IN FURNISHING INCOME TAX RETURN
Section 234A says that the interest should be leviable for the late or non furnishing of return of income on due date.
According to this section where a return of income is filled after due date u/s.139(1)(4) / notice u/s.142 or a return of income is not filled, the assesse shall be liable to pay simple interest @ of 1% for per month or part of month.
Duration of Interest:
- Where a return of income is filled after due date:
Interest should be payable from the date following the due date to the date of filling of return of income . For e.g. The due date of filling of return is 31stjuly but the return is filed on 15thoct. In this case interest should be payable for the three month (Aug, Sep, Oct).
- Where a return of income is not filled:
Interest should be payable from the date following the due date to the ending date of completion of assessment u/s. 144. For e.g. The due date of filling of return is 31stjuly, 2013 & the Assessment u/s. 144 is completing on 31st march,2015 .In this case interest should be payable for the period of twenty months.
Amount on which interest is leviable:
Interest should be leviable on the amount of tax on total income as reduced by the :
(i) advance tax, if any, paid;
(ii) any tax deducted or collected at source (TDS) ;
(iii) any relief of tax allowed under section 90 on account of tax paid in a country outside India;
(iv) any relief of tax allowed under section 90A on account of tax paid in a specified territory outside India referred to in that section;
(v) any deduction, from the Indian income-tax payable, allowed under section 91, on account of tax paid in a country outside India; and
(vi) any tax credit allowed to be set off in accordance with the provisions of section 115JAA
The above provision can be better understand with the following example:
Tax on total income is : 500000
Advance tax Paid : 300000
Tax Deducted at source: 40000
Due date of filling of return is : 30th Sep,2013
Actual Date of filling of return of income is: 15th Jan,2014
Assesseeis liable to pay interest for a Period of 4 Months (Oct, Nov, Dec, Jan).
Amount on which Interest is payable:
|Tax on Total Income||500000|
|Less: Advance Tax||300000|
|Amount on which Interest Leviable||160000|
Calculation of Interest Amount:
= Rs. 6400/-