What is Section 234B of Income Tax Act?

What is Section 234B of Income Tax Act?

Under section 234B, interest for default in payment of advance tax is levied at 1% per month or part of a month. The nature of interest is simple interest. In other words, the taxpayer is liable to pay simple interest at 1% per month or part of a month for default in payment of advance tax.

What is Section 234B and 234C?

Interest Penalty under Sections 234A, 234B & 234C. Paying taxes and filing Income Tax Returns are not mandatory but they surely are the responsibility of every Indian citizen. The government clearly states that if an individual earns a certain amount of income in a year, he needs to pay the income tax.

How do you calculate interest under section 234A 234B 234C?

1% interest rate per month for a period of 3 months is computed for advance tax less than 30% of the amount on or before September 15. In case advance tax is paid on or before December 15 is less than 60% of the taxable amount, interest of 1% for a period of 3 months is levied.

How is 234B calculated?

Interest calculation Rs 14,300(assessed tax, fraction of 100 ignored) – Rs 5000(Advance Tax) = Rs 9300 Rs 9300 x 1% x 4 months (April, May, June, July) = Rs 372 Rs 372 is the interest payable under section 234B by Rohit.

How is 234A calculated?

You will be charged an interest amount of 1% per month or part of the month (simple interest) on the tax amount outstanding. This interest will be calculated from the due date applicable to you for filing of return of the relevant financial year till the date that you actually file your return.

HOW IS 234C calculated?

Calculation of Interest under section 234C when the taxpayer is not opting for presumptive income under section 44AD. The rate of interest will be charged @ 1% per month for three months. The amount on which interest is calculated is 15% of the amount less tax already paid before the dates.

When 234B & 234C is applicable?

Interest under section 234B is applicable when: Your tax liability after reducing TDS for the financial year is more than Rs 10,000 and you did not pay any advance tax.

How is interest calculated under section 234A?

How is interest penalty calculated under Section 234A? Interest Penalty = Outstanding Tax X 1% X Number of month (delayed), where fraction of a month is considered as full month. Example, if you are 4 months 10 days late, the interest will be charged for 5 months.

IS 234C applicable for salaried employees?

Recently, the Supreme Court of India (the Supreme Court) in the case of Ian Peters Morris1 (the taxpayer) held that the employee would not be liable to pay interest under Sections 234B and 234C of the Income-tax Act, 1961 (the Act), in relation to any income chargeable to tax as salary, since tax on such income would …

What is section 234B of the Income Tax Act?

If the taxpayer delays the payment of advance tax charged on him or her, he or she will have to pay interest under section 234B. This interest can also be levied on you if you have paid the advance tax and the amount is less than 90% of the assessed tax.

What is the objective of the article 234B and 234C?

The objective of this article is to highlight few instances/issues which are to be considered while arriving the amount on which interest has to be calculated under sections 234B and 234C of the Act.

When are penal provisions under section 234B invoked?

Penal provisions under section 234B are invoked under any of the following conditions: In either of the above cases, penal interest at 1% per month of the assessed tax minus advance tax paid will be applicable under section 234B.

What is the difference between 234C and 234B interest?

However, 234C interest to be calculated based on returned income. So, in-spite of change in tax as per returned income and assessed income, there will be no change in 234C interest but there can be change in 234B interest.