Mandatory & Penal Interest - Section 234A - Income Tax - Ready Reckoner - Income Tax

Interest for default in furnishing ROI [ Section 234A(1) ] 1 . Chargeability: The assessee is liable to pay interest in the following cases :- ROI is filed after the due date specified u/s 139(1) ; or ROI is not filed. 2. Computation: (a) Rate:- 1% per month or part of the month simple interest. (b) Period:- The interest will be payable for the period commencing from the date next following the due date specified u/s 139(1) and ends on: (i) In case where ROI is filed, the date of filing of ROI, (ii) In case where ROI is not filed, the date of completion of assessment u/s 144 / 147 / 153A . Note:- Part of the month shall be considered as full month. (c) Amount on which interest is payable:- Tax determined u/s 143(1) or an assessment u/s 143(3) / 144 / 147 / 153A (Whichever section apply) as reduced by the following:- Tax deducted and collected at source Advance tax paid by the assessee any relief of tax allowed under section 89 The amount of relief of tax allowed u/s 90 / 90A and u/s 91 Tax credit allowed to be set off u/s 115JAA and 115JD Note: Self Assessment tax paid u/s 140A shall be deducted if it is paid on or before the due date. [CIT, and another Vs Pranoy Roy and another India Meters Ltd. 2008 (9) TMI 150- SC] 3. Computation of Interest for payment under section 140A (relating to self assessment tax) (a) Substitute the words Tax determined u/s 143(1) or on assessment u/s 143(3) / 144 / 147 / 153A by the words tax on income declared in ROI . 4. Interest payable under this section shall be reduced by the interest. If any, paid u/s 140A or otherwise. 5. In case where an assessee has failed to furnish ROI, then interest u/s 234A shall be applicable. 6. For computing interest, Tax means Income Tax including surcharge Education Cess . 7. Where as a result of an order made u/s 154/ 250/ 254/ 260A/262/263/264 or order of settlement commission u/s 245D, the amount of Income Tax on which interest was payable under this section is reduced or increased, then the interest under this section shall also be reduced or increased correspondingly. Interest will be computed as under : Step I - Step II = Balance interest payable u/s 234A Step I: Tax on total income determined u/s 143(1) or on regular assessment u/s 143(3) or 144 or on first assessment u/s 147 or section 153A (whichever section is applicable) if not covered u/s 143(1) or 143(3) or 144 XXXX Less: (i) Tax deducted/collected at source XX (ii) Advance Tax Paid XX (iii) Amount of tax Relief u/s 89 , 90 and 90A and deduction of income tax payable u/s 91 , XX (iv) Tax Credit allowed to be set off u/s 115JAA / 115JD from tax on the total income. XX Amount on which interest is payable XXXX Interest payable shall be: - Amount on which interest is payable * 1%* No. of Months XXXX Step II: Tax on Total Income declared in ROI XXXX Less: (i) Tax deducted/collected at source XX (ii) Advance Tax Paid XX (iii) Amount of tax Relief u/s 89 , 90 and 90A and deduction of income tax payable u/s 91 , XX (iv) Tax Credit allowed to be set off u/s 115JAA / 115JD from tax on the total income. XX Amount on which interest is payable XXXX Interest paid u/s 140A was computed as under: - Amount on which interest is payable * 1%* No. of Months XXXX