This is the last part in a 3-part series about Interest imposed by the I-T Department.
Part III: Section 234 C
(Interest for Deferred Payment of Advance Tax)
Advance tax is paid on the following dates of a financial year:
|On or Before||In case of all taxpayers other than taxpayer opting for presumptive income u/s 44AD||Taxpayers opting for presumptive income u/s 44AD|
|15th June||Up to 15% of advance tax payable||NIL|
|15th September||Up to 45% of advance tax payable||NIL|
|15th December||Up to 75% of advance tax payable||NIL|
|15th March||Up to 100% of advance tax payable||Up to 100% of advance tax payable|
The interest for late payment is set at 1% simple interest on the amount of tax due, calculated from the individual cut off dates shown above, till the date of actual payment of outstanding taxes.
Calculation of Interest under section 234C – In case of a Tax Payer other than opting for presumptive income u/s 44AD
|Rate of Interest||Period of Interest||Amount on which Interest is calculated|
|If Advance Tax paid on or before June 15 is less than 15% of the Amount*||Simple interest @1% per month||3 months||15% of Amount* less tax already deposited before June 15|
|If Advance Tax paid on or before September 15 is less than 45% of the Amount*||Simple interest @1% per month||3 months||45% of Amount* less tax already deposited before September 15|
|If Advance Tax paid on or before December 15 is less than 75% of the Amount*||Simple interest @1% per month||3 months||75% of Amount* less tax already deposited before December 15|
|If Advance Tax paid on or before March 15 is less than 100% of the Amount*||Simple interest @1% per month||–||100% of Amount* less tax already deposited before March 15|
*Amount = Tax on total income less TDS less relief u/s 90 or 91 less tax credit u/s 115JD
Consider that your total tax liability for this financial year is Rs. 100,000 it needs to be paid in installments as explained above
If however, you made partial payments instead, you will be liable to pay interest as per the last column in the table below:
|Payment Dates||Advance Tax payable||Total Advance Tax paid||Shortfall (Cumulative)||Penalties (Cumulative)|
|15th June||15,000||5,000||10,000||@1% * 3*10,000 = 300|
|15th September||45,000||25,000||20,000||@1% * 3 *20,000=600|
|15th December||75,000||35,000||40,000||@1% * 3 *40,000=1200|
|15th March||1,00,000||50,000||50,000||1% * 1 *50,000=500|
Total interest Payable is Rs 2600.
Remember, ClearTax automatically calculates the penalties under Section 234 for you based on the amounts you enter and the dates. We also account for special provisions.