INTEREST PANALTY OF INCOME TAX

INTEREST PANALTY

Interest panalty is charged Under Section
234 A
234 B
234 C

A) Panalty interest U/s 234 A is attached when you fail to file  your income tax Return (ITR)
on Due Date

B) Penalty interest u/s 234 B is attached when you fail to pay 90% of advance tax installment on or
before 15th March as stated below :

Due Date                        Tax Ratio
15th September                   30%
15th December                   30%
15th March                          30%

C) Penalty Interest U/s 234 C is attacted when advance tax paid by is less then actual
advance tax payable

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INTEREST PANALTY  234 A

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Calculation of interest

A) Section 234 A
Under this section 1% interest is charged per month on your tax Liability. when you fail to file
your return on or before due date i.e.

31st July or
30th September
whichever applicable

For Example Mr.A an individual is liable to pay Rs. 8000/- Tax and also to file his ITR on or
before 31st July but Mr A files his return on 10th September , here Mr. A is liable to pay Rs. 160 as
penalty interest which is 1% per of his tax liability calculated as under :

= Tax X 1% X months
8000 x 1% X 2 Total Months
= Rs. 160 Interest U/s 234 A

*********PLEASE NOTE*********

1) In the above case the delay in filing ITR is only one month and ten days only still while
calculating interest we have to consider two months.

Even if ITR delay is only ten days still interest will be calculated on entire one month and not ten days.

2) if your tax liability is ZERO then section 234 A/B/C is not applicable