What is 234B and 234C of Income Tax Act?

What is 234B and 234C of Income Tax Act?

Advance tax is usually payable when your tax liability exceeds Rs. 10,000 in a financial year. However, if you forget or delay the payment, you are penalized in the form of interest under section 234B of the Income Tax Act. You also must pay similar penalties under section 234A and 234C.

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.

What is 234B and 234C interest?

Under Section 234B, the taxpayer must pay at least 90% of the tax that is due to be paid at the end of the financial year. In case the advance tax payment is delayed, then a charge at the rate of 1% of the outstanding amount will be levied on him as a penalty. What do you mean by Section 234C?

How do you calculate interest 234A 234B & 234C with example?

Solution: According to section 234B mentioned above, interest @ 1% will be calculated on the taxes due for a period of 4 months (April, May, June & July), considering July as a full month. Interest liability of Mr. Sachin is – (₹ 84790 – ₹ 70000 = ₹ 14790). Thus, interest payable u/s 234B will be ₹ 592.

When 234C interest is applicable?

Interest under section 234C is levied for a period of 1 month in case of short fall in payment of the last installment and for a period of 3 months in case of short fall in payment of 1st, 2nd and 3rd instalments.

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 …

How do you calculate 234C?

Since total tax paid on or before 31st March 2018 is less than 90% of the advance tax. Mr….Interest Calculation Under Section 234C.

Date of Payment Total Amount (Rs.)
On or Before 15th September 15000
On or Before 15th December 25000
On or Before 15th March 40,000
On 18th July 85,000

Is 234B & C applicable to senior citizens?

234B of the I-T Act, senior citizens without professional income are not liable to pay advance tax. As of now, banks are deducting 10% tax on fixed deposit interest earned in the case of senior citizens also. This tax deduction is tantamount to compulsory deduction of advance tax payment.

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.

How is Section 234C of income tax calculated?

If the amount of advance tax is less than 15% of the amount paid on or before 15th June.

1. The rate of interest will be charged @ 1% per month for three months.
2. The amount on which interest is calculated is 15% of the amount less tax already paid before the dates.

What is section 234B of IT Act 1961?

Section 234C of IT Act 1961 provides for Interest for deferment of advance tax. Recently, we have discussed in detail section 234B (Interest for defaults in payment of advance tax) of IT Act 1961.

What is section 234C of income tax?

Here section 234C deals with interest to be levied on defaulters of advance tax installment payments. How is interest calculated on 234a? Income Tax Act had made a provision of Interest payment for late filing of Income Tax Returns.

What are the different interests payable under Section 234 of Ita?

There are 3 different Interests payable under section 234 of the Income Tax Act. The same is given as under- Interest under section 234A-Delay in Filing of Income Tax Return; Interest under section 234B- Delay in payment of Advance Tax; Interest under section 234C- Short payment of Advance Tax

When is interest chargeable under the Income Tax Act 1961?

In case the assessee fails to comply with the provisions of the Act, interest shall be chargeable under Sections 234A, 234B and 234C of the Income Tax Act, 1961. If the assessee fails to file the return of income before the due date of filing the return*, he shall be liable to pay the simple interest @ 1% per month or part of the month.