HOW TO COMPUTE INTEREST U/S 234 A OF INCOME TAX ACT
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HOW TO CALCULATE INTEREST u/s 234 OF INCOME TAX ACT
Interest u/s 234A is the Interest for default for Furnishing Return of Income u/s 139(1) or 139(4) or Return filed in response to notice u/s 142(1).
1.- CONDITIONS FOR LEVY OF INTEREST u/s 234A
a) Where Return of Income (ITR) is not furnished by Assessee.
b) Where Return of Income (ITR) is furnished by assessee after Due Date of furnishing Return specified u/s 139(1).
2.- RATE OF INTEREST
>1% per month or part of month.
(Part of month means Interest for whole month is charged @1% even if the
default is for 1 day)
3.- AMOUNT ON WHICH INTEREST u/s 234 A IS COMPUTED
Total Tax Liability XXX
Less- TDS XX
Relief u/s 89(1) XX
Relief u/s 90/91 XX
Advance Tax XX
NET TAX LIABILITY XXX
4.- CHARACTERSTICS OF INTEREST U/S 234A
>Interest u/s 234A is mandatory in nature which can only be waived off by chief Commissioner of Income Tax (CCIT) or Direct General of Income Tax (DG).
>If the amount of self assessment tax paid by assessee fall short of the amount required to be paid u/s 140A as self assessment tax.
Then the amount so paid shall be first adjusted towards Interest and balance towards Income Tax.
5.- ILLUSTRATIONS
Suppose an individual furnish his ITR on 1st Sept.2015 and the due date of filing is 31st July,2015.
Income from salary = Rs 3,50,000
Tax Payable By Individual = Rs 10,000
TDS deducted on salary = Rs 2,000
Then, Interest required to be paid by such individual u/s 234A is:
Period of default = 2 months (August/September)
Rate of Interest = 1%
Amount of Interest = (10,000-2,000)1%*2 months
= Rs 160
Author Can Be Reached At :
Ankit Gupta
ankit@taxzippy.com
Category : Income Tax | Comments : 0 | Hits : 1297
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