How is interest u/s 234C calculated?

How is interest u/s 234C calculated?

Calculation of Interest under section 234C when the taxpayer is not opting for presumptive income under section 44AD. The rate of interest will be charged @ 1% per month for three months. The amount on which interest is calculated is 15% of the amount less tax already paid before the dates.

WHAT IS 234C interest in income tax?

Interest under section 234C is levied at 1% per month or part of a month. Therefore, in case of for short payment/ non-payment of individual installment(s) of advance tax, the taxpayer is liable to pay simple interest at 1% per month or part of a month (that is because fraction of a month is considered as full month).

How do you calculate interest under section 234a 234B 234C?

1% interest rate per month for a period of 3 months is computed for advance tax less than 30% of the amount on or before September 15. In case advance tax is paid on or before December 15 is less than 60% of the taxable amount, interest of 1% for a period of 3 months is levied.

What is difference between 234B and 234C?

Under Section 234B, the taxpayer must pay at least 90% of the tax that is due to be paid at the end of the financial year. The taxpayer has the provision to pay his tax in the form of 4 instalments. Under Section 234C, a penalty is imposed if the tax payment is delayed.

What is Section 234B and 234C?

Why is there interest under Section 234B?

If you have to pay Rs 10,000 or more in taxes in a financial year, advance tax may be applicable to you. Advance Tax means paying your tax dues on the due dates provided by the income tax department. If you don’t pay advance tax on time or default completely, you may be liable to pay interest under section 234B.

What does section 234C of the Income Tax Act mean?

Section 234C of the Income Tax Act imposes a penal interest in case of default in payment of advance tax instalments. If the due instalments of advance tax is not paid/short paid, interest under section 234C will be levied.

When is interest you / s 234C not leviable?

Interest u/s 234C is not leviable if the shortfall in payment of Advance Tax instalment is due to Capital Gains or Winnings from Lottery etc. and the taxpayer pays the required amount of tax on such incomes with the next instalment & if no instalment is due till 31st March of the year.

When do I have to pay interest under section 234B?

Here, even though the assessee has paid taxes, it is to be checked that 90% of total tax liability has been paid to comply with the provision of section 234B. If the payment falls short of 90% of the tax required to be paid, the interest under section 234B shall be charged.

What is the interest in the Advance Tax Act?

– The Interests u/s 234B of Income Tax Act is levied upon those taxpayers who default in payment of Advance Tax. – Interest u/s 234C of Income Tax Act is levied upon those taxpayers who default in paying installments of advance tax.