How to calculate Interest U/s 234A, 234B, 234C

According to Income Tax Act 1961 there is various provisions to pay interest on Income payable during the relevant previous year. There are certain cases where interest is compulsorily payable by the assessee.

Interest under section 234A for defaults in furnishin of return of income.

Interest under section 234B for defaults in payment of advance tax.

Interest under section 234C for deferment of advance tax.

Interest under section 234A for defaults in furnishin of return of income.

Simple interest @1 % per month or part of the month.The interest will be payable for the period commencing on the date immediately following the due date and  such interest end on the date

1.The date of furnishing the return of income.

or

2. The date of complation of completion of assessment  under section 144

Interest is payable on tax on total income as return of income ortax on total income determined under section 144

Minus the following

1.Tax deducted and collected at souce.

2. AdvanceTax if paid

3.Any relief of tax allowed under section 89.

 

Interest under section 234B for defaults in payment of advance tax.

Simple interest @1 % per month or part of the month.The interest will be payable from 1st April of the relevant assessment year to the date of determination of income under section 143(1) or assessment under section 144.

When interest is payable

1. Where  advance tax  has not paid by the assessee

2. Where advance tax paid by the assessee is less than 90% of the assessed tax.

Assessed tax as per return of income furnished by assessee or best judgement assessment Under section  144

Minus

1.Tax Deducted at sources

2.Tax Credit allowed

3. Any relief of allowed U/s 9

4. The amount of double taxation  relief undr section 90 and 90A

 

Interest under section 234C for deferment of advance tax.

Where an assessee liable to pay advance under section 208 has failedto pay tax or has made late payment of advance tax.

When Interest is payable under section 234C	Rate of Interest	Period	Amount on which interest is to be paid
Where advance tax paid on or before  15th June is less than 12% of Tax due on returned Income.	Simple interest @1% P.M	Three Months	15% of  tax due on returned income minus advance tax paid up to 15th June
Where advance tax paid on or before  15th Septemberr  is less than 36% of Tax due on returned Income.	Simple interest @1% P.M	Three Months	45% of  tax due on returned income minus advance tax paid up to 15th September
Where advance tax paid on or before  15th  December is less than 75% of Tax due on returned Income.	Simple interest @1% P.M	Three Months	75% of  tax due on returned income minus advance tax paid up to 15th December
Where advance tax paid on or before  15th marchis less than 100% of Tax due on returned Income.	Simple interest @1% P.M	One Month	100% of  tax due on returned income minus advance tax paid up to 15th March