1. Section 234A: Interest for defaults in furnishing return of income

The IT Act has made provisions for a interest of 1% every month or part of the month on the amount of tax payable. This interest is calculated from the due date to the date of actually filing the income tax return.

For example: ABC has failed to file the tax return on tax payable of Rs 2,00,000, on stipulated date of 31 July 2018, and submits it on 2 December 2018.

The Simple interest due on the tax will be- Tax Payable: Rs 200000

Delay in Payment of Tax from 31 July 2018: 5 months (August, September, October,

November and December) Interest u/s 234A : 2,00,000 * 5% = Rs 10,000

2. Section 234B: Interest for defaults in payment of advance tax

This penalty provision activates in two cases:

1. If the Assess was liable to pay advance tax, but failed to deposit that.

2. If the amount deposited was less than 90% of the tax to be deposited.

In both the above cases, assess will be levied a Simple Interest @ 1% per month or part of the month. Please remember, if you deposited the advance tax which was more than 90% of the total tax, then no interest will be charged from you. This interest is chargeable from 1 April of the Assessment Year.

In calculation of 90% we will consider the amount of tax payable after TDS.

3. Section 234C: Payment of Advance tax not in time or Interest for deferment of advance tax:

• On or before 15 June 15% of tax due on the returned income or the amount of such advance tax paid Simple Interest @ 1% per month or part of the month for 3 months.
• On or before 15 September 45% of tax due on the returned income or the amount of such advance tax paid Simple Interest @ 1% per month or part of the month for 3 months .
• On or before 15 December 75% of tax due on the returned income or the amount of such advance tax paid Simple Interest @ 1% per month or part of the month for 3 months.
• On or before15 March 100% of tax due on the returned income or the amount of such advance tax paid

Simple Interest @ 1% per month or part of the month for 1 month

However if the advance tax paid by the assess 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, thirty-six per cent respectively of the tax due on the returned income, then, the assess shall not be liable to pay any interest on the amount of the shortfall on those dates .