The Income Tax Department expects taxable persons (assessees) to file their Income-tax Returns on or before the notified due dates. In case the assessees fail to file their Income Tax Returns within the prescribed due dates, they will be liable to pay interest for the delay. This interest for default in furnishing the return (section 234a) is charged under Section 234A of the Income Tax Act. In this article, we will elaborate on the provisions of Section 234A:
When Is Interest u/s 234A Applicable? |
How Is Interest u/s 234A Calculated? |
Points To Remember |
Illustration |
If an assessee:
he/she will be liable to pay interest u/s 234a of income tax act. Note: Here, Income Tax Return means returns for any Assessment Year (AY) under/in:
In case the assessee fails to file returns under any of the sections mentioned above, within the prescribed time frame, he/she will be liable to pay simple interest at the rate of 1% for every month (or part of a month) delayed. The period of delay will be calculated from the date immediately following the due date (the day immediately after the due date). This interest will be calculated on the amount of the Income Tax payable after deducting the:
Let us assume that Mr A filed his Income Tax Returns for FY 2018-19 on 25 March 2020. The due date to file returns for Mr A was 31 August 2019.
Particulars | Calculations | Comments |
Tax Payable (After Advance Tax and TDS) | INR 2,45,000 | |
Delay period (in months) | 7 months | The period between 1 September 2020 to 25 March 2020 is considered. Though he filed the returns on 25 March, the part of the month will be regarded as a full month for interest calculation. |
Interest u/s 234A | INR 17,150 | 2,45,000*1%*7 |
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