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Radhika’s total tax liability is Rs 48,000. Radhika paid this amount on 12th June while filing her return. No tax was deducted at source in her case. Radhika’s total tax liability is more than Rs 10,000, and hence she was liable to pay advance tax. As a result, Radhika will be liable to pay interest under section 234B.
Rs 48,000 x 1% x 3 (April, May, June)
= Rs 1,440
Radhika is liable to pay Rs 1,440 interest as per section 234B.
Arnav had a total tax payable of Rs 56,000, out of which Rs 48,000 was paid by him on 29th March as advance tax. The remaining balance of Rs 8,000 was paid by Arnav at the time he was filing his return on 30th May.
Even though Arnav has paid advance tax, we need to check whether he paid at least 90% of the assessed tax as advance tax or not. Assessed tax is Rs 56,000. 90% of assessed tax is Rs 50,400. However, Arnav deposited only Rs 48,000, which is less than 90% of assessed tax. Therefore, Arnav is liable to pay interest under section 234B.
56,000(assessed tax) – Rs 48,000 (advance tax)
8,000 x 1% x 2 (April and May)
= Rs 160.
Rs 160 is the interest payable under section 234B by Arnav.
Assume that the total tax Rohit needs to pay for the financial year is Rs. 1,50,000. A TDS of Rs 1,35,627 was already deducted from his income. Rohit paid Rs 5,000 on 25th March and balance of Rs 9,373 he paid at the time of filing his return on 20th July.
Let’s check whether Rohit needs to pay interest under section 234B
First let’s calculate assessed tax. Assessed tax = Rs 1,50,000 (total tax) – Rs 1,35,627 (TDS)
= Rs 14,373
Rohit should have paid at least 90% of the assessed tax or 90% of Rs 14,373 which is Rs 12,935 before 31st March. However, he paid only Rs 5,000. Therefore, Rohit is liable to pay interest under section 234B
Rs 14,300(assessed tax, fraction of 100 ignored) – Rs 5000(Advance Tax) = Rs 9300
Rs 9300 x 1% x 4 months (April, May, June, July)
= Rs 372
Rs 372 is the interest payable under section 234B by Rohit.