Shankar BoseInspector of Income-tax

MSTU, Puri

Two Parts :

1. Interest payable by the Assessee,

2. Interest payable to the Assessee.

by the assessee

in the following cases :

- A. Interest for dafaults in furnishing of the return of income

u/s 234 A,

- B. Interest for defaults in payment of Advance tax

u/s 234 B ,

- C. Interest for deferment of payment of Advance Tax

u/s 234 C,

D. Interest for granting of Excess refund.

u/s 234 D.

- Interest When the assessee is deemed to be in default.

u/s 220(2).

Interest for failure to deduct and Pay TDS

u/s 201.

140 A paid before Due date ; Return Submitted after due date :

--- Intt. u/s 234 A is not payable .

( Dr. Pranoy Roy V CIT [2002] 121 Taxman 314 ( Del) ]

Intt. Must be charged in the asstt. Order.

“Charge Intt. As per law ” will not suffice.

[CIT V. Inchcape India (P) Ltd [2002] 124 Taxman 744( Del) ]

Books of a/c with IT authority.

[ Intt u/s 234 A is not chargeable for delayed return ]

Issue of notice u/s 142 (1) does not give the AO jurisdiction to levy intt. u/s 234 A.

[ CIT V Ranchi Club Ltd.[(2001) 114 Taxman 414 ( SC) ]

Cash seized during search should be treated as Advance Tax for the Purpose of computation of Intt u/s 220(2) & sections 234 A,B,C.

[ Vipul D. Doshi V CIT (2001) 118 Taxman 30 ( Mum) ]

1. On delayed refund

u/s 244A.

2.132B(4) ::

( Interest in respect of seized or requisitioned assets)

234 A , B , C ---------

Default in Furnishing of Return of Income before due date :

Rate of Interest : @ 1 % p.m. or part of a

month.

Period : From Due date to date of Furnishing of the Return.

From Due date to Completion of assessment u/s

144

Amount of tax determined u/s 143 (1)

Or

Tax assessed

[ Minus ](1) Advance Tax ,(2) TDS/TCS ,(3) Relief/Deduction of tax allowed u/s

90,90A,91 or any Tax Credit allowed to be Set Off u./s 115 JAA , 115JD

Intt for default for payment of Advance tax

When Intt is payable

Amt. On which intt. Is payable

Rate of Int Period for which intt. Is payable

‘A’ failed to pay Adv. Tax

Assessed Tax @ 1% for every month or part of a month

From 1st April of AY to dt of 143(1) or dt of Regular asstt.

Adv tax < 90 % of Assessed Tax

Assessed Tax minus Adv Tax

@ 1% for every month or part of a month

From 1st April of AY to dt of 143(1) or dt of Regular asstt.

Assessed Tax : = Tax on T.I. [u/s 143 (1)] / Regular

assessment MINUS(1) TDS/TCS ,(2) From AY 2007-08 any Relief/Deduction of

tax allowed u/s 90,90A,91 or any Tax Credit allowed to be Set Off u./s 115 JAA , 115JD

Intt for Deferment of Advance tax::::

If ‘A’ Under estimated installments of advance Tax:

----Intt to be calculated as below :

When 234 C payable ?

@ of Intt Period of Intt

Amt. on which intt. Is payable

If Adv Tax paid( before Sept 15) < 30 % (a-b)

1% pm/part of a month

3 months 30 % ( a-b)-c

If Adv Tax paid( before DEC 15) < 60 % (a-b)

1% pm/part of a month

3 months 60% (a-b)-d

If Adv Tax paid( before MAR 15) < 100 % (a-b)

1% pm/part of a month

100% (a-b) -e

a. : Tax returned by “a”. b. : TDS / TCS . c. : Adv. Tax Before SEPTEMBER 15. d. : Adv. Tax Before DECEMBER 15 e. : Adv. Tax Before MARCH 15

When 234 C payable ?

@ of Intt Period of Intt

Amt. on which intt. Is payable

If Adv Tax paid( before June 15) < 12 % (a-b)

1% pm/part of a month

3 months 15 % ( a-b)-c

If Adv Tax paid( before Sept 15) < 36 % (a-b)

1% pm/part of a month

3 months 45% (a-b)-d

If Adv Tax paid( before DEC 15) < 75 % (a-b)

1% pm/part of a month

3 months 75% (a-b)-d

If Adv Tax paid( before MAR 15) < 100 % (a-b)

1% pm/part of a month

100% (a-b) –e

a. : Tax returned by “a”. b. : TDS / TCS , etc. c. : Adv. Tax Before June 15. d. : Adv. Tax Before September 15 e. : Adv. Tax Before December 15 f. : Adv. Tax Before March 15

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Section 234 D( applicable from June 01, 2003).

Interest u/s 234 D is attracted in any of the Two cases :

1] Where Refund is granted u/s 143 (1) but no refund is due on regular

assessment.

2] Where Refund is granted u/s 143 (1) But the refund so granted exceeds the amount refundable on regular assessment

Rate of Interest ::

0.5 % p.m. or part of a Month.

Period for which intt. Payable ::

From the date of grant of refund to the date of Regular assessment

Amount on which Intt. Is payable::

[Case1] : on Whole of amount.

[Case 2] : On the Excess amount refunded

u/s 143(1) over the amount refundable on

regular assessment.

TDS Default Default to 156 notice

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1. 132B (4) :

Who shall pay : Central Government.

Rate of Interest : 0.5 % per month or part of a

month.

Period Involved : Calculated from the date immediately following the expiry of the period of 120 days from the date on which the last Authorization for Search u/s 132 or Requisition u/s 132A was Executed … To… the date of completion of assessment u/s 153 A or Chapter XIV-B( Special Procedure for assessment of search cases.

Amount on which interest to be paid :

Excess amount i.e.

Amount seized or requisitioned [ MINUS ] Amount already Released [ MINUS ] The amount required to meet all existing

liabilities and liability determined on completion of assessment.

• Section 244A

1. Refund out of TDS, TCS & Advance Tax.

244A(1)(a)

– Refund is not less than 10% of assessed tax. 244A(1)(a)

– Interest is to be given from the first day of the AY to the date of granting of refund.

2. Refund is out of tax other than TDS/TCS/ADVANCE TAX.

-- Then intt is payable from the date of notice of Demand ( Or Assessment Order ) to the date of signing of refund voucher.

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