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Interest Calculation For Incometax

The document discusses the calculation of interest under sections 234A, 234B and 234C of the Indian Income Tax Act. Section 234A deals with interest charged for late filing of tax returns. Section 234B deals with interest for insufficient payment of advance tax. Section 234C deals with interest charged if the advance tax paid by the taxpayer is less than the amount payable as per the previous year's tax. Several examples are provided to illustrate how interest is calculated under these sections.

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3K views8 pages

Interest Calculation For Incometax

The document discusses the calculation of interest under sections 234A, 234B and 234C of the Indian Income Tax Act. Section 234A deals with interest charged for late filing of tax returns. Section 234B deals with interest for insufficient payment of advance tax. Section 234C deals with interest charged if the advance tax paid by the taxpayer is less than the amount payable as per the previous year's tax. Several examples are provided to illustrate how interest is calculated under these sections.

Uploaded by

amarlaxmi
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLS, PDF, TXT or read online on Scribd

CALCULATION OF INTEREST

234A - LATE FILING

FOR EXAMPLE;

DUE DATE 31.10.2006


FILING DATE 02.03.2007 DELAY 5 MONTHS

TAX DUE 10000.00


TAX PAID 9000.00 (Advance tax, TDS,TCS,140-A)
BALANCE TAX DUE 1000.00

@ 1% PER MONTH ON BALANCE TAX DUE

1000 X 1 X 5
234 A = = 50.00
100

234 B- INSUFFICIENT PAYMENT OF ADVANCE TAX

FOR EXAMPLE;

TOTAL TAX PAYABLE = 10,000.00 (INCLUDING E.C)

90% OF TOTAL TAX AS ADVANCE TAX+ TDS+ TCS = 9,000.00

ADVANCE TAX PAID = 8,000.00

SHORT OF 90% OF TOTAL TAX DUE = 2,000.00

234 B = @ 1%PER MONTH ON 2000/-

FROM 01.04.2006 UPTO DATE OF FILING OF RETURN

2000 X 1 X 12
INTEREST U/S 234 B = = 240.00
100

CONTD. 2.
- 2 -
234 C -

BASIS = AS PER INCOME OF PREVIUOS YEAR

LAST YEAR TOTAL TAX PAYABLE = 10,000.00 (INCLUDING E.C)

15.09.2005 30% 30% 3,000.00 3,000.00

15.12.2005 30% 60% 3,000.00 6,000.00

15.03.2006 40% 100% 4,000.00 10,000.00

CURRENT TAX PAYABLE = 15,000.00

RATE 1% PER MONTH

15.09.2005

CURRENT YEAR CALCULATION 4,500.00


LAST YEAR CALCULATION 3,000.00
BALANCE AMOUNT 1,500.00

INTEREST ON BALANCE AMOUNT

1500 X 1 X 3
= = 45.00
100

15.12.2005

CURRENT YEAR CALCULATION 9,000.00


LAST YEAR CALCULATION 6,000.00
BALANCE AMOUNT 3,000.00

INTEREST ON BALANCE AMOUNT

3000 X 1 X 3
= = 90.00
100
CONTD.. 3.

- 3 -
15.03.2006

CURRENT YEAR CALCULATION 15,000.00


LAST YEAR CALCULATION 10,000.00
BALANCE AMOUNT 5,000.00

INTEREST ON BALANCE AMOUNT

5000 X 1 X 1
= = 50.00
100

INTEREST 234 A = 185.00

* IF ADVANCE TAX WAS NOT PAID THEN

234 C = TOTAL TAX PAYABLE X 3.7%

= 555.00
CALCULATION OF 234C

TAX DUE 5,150 (Enculding E.C.)

ADVANCE TAX PAID

14.09.06 500
18.12.06 800
13.03.07 500

THEN 234 C
PERIOD 15/09 15/12 15/03
PERCENTAGE 30% 30% 40%
TAX 1,545 1,545 2,060
PERCENTAGE 30% 60% 100%
AS PER 234C 1,545 3,091 5,150
ADVANCE TAX PAID 1,500 2,000 1,500
45 1,091 3,650
234C PERCENTAGE 3% 3% 1%
1 33 37

234C = 71

TAX CALCULATION OF AGRILCALTURAL INCOME

TAXABLE INCOME 105,000.00

AGRICULTURAL INCOME 150,000.00

THEN TAX = Tax on (T.I.+ A. I.)


(-) Tax on (Egimition + A. I.)
Net Tax Due

26,000.00
25,000.00
= 1,000.00
ASSESSMENT YEAR 2006-07 & 2007-08

INDIVIUAL, HUF,(Below aged 65 years) for Men

Tax upto 0 100,000 NO TAX


100,001 TO 150,000 (Net Income - 1,00,000) X 10%
150,001 TO 250,000 (Net Income - 1,50,000) X 20%+ 5,000
250,001 TO 1,000,000 (Net Income - 2,50,000) X 30%+ 25,000

INDIVIUAL, HUF,(Below aged 65 years) for Women

Tax upto 0 135,000 NO TAX


135,001 TO 150,000 (Net Income - 1,35,000) X 10%
150,001 TO 250,000 (Net Income - 1,50,000) X 20%+ 1,500
250,001 TO 1,000,000 (Net Income - 2,50,000) X 30%+ 21,500

INDIVIUAL, HUF,(Above aged 65 years)

Tax upto 0 185,000 NO TAX


185,001 TO 250,000 (Net Income - 1,85,000) X 20%
250,001 TO 1,000,000 (Net Income - 2,50,000) X 30%+ 13,000

FOR FIRMS

TAX = NET PROFIT X 30%


CALCULATION OF INTEREST
234A - LATE FILING

FOR EXAMPLE;

DUE DATE 31.10.2006


FILING DATE 02.03.2007 DELAY 5 MONTHS

TAX DUE 10000.00


TAX PAID 9000.00 (Advance tax, TDS,TCS,140-A)
BALANCE TAX DUE 1000.00

@ 1% PER MONTH ON BALANCE TAX DUE

1000 X 1 X 5
234 A = = 50.00
100

234 B- INSUFFICIENT PAYMENT OF ADVANCE TAX

FOR EXAMPLE;

TOTAL TAX PAYABLE = 10,000.00 (INCLUDING E.C)

90% OF TOTAL TAX AS ADVANCE TAX+ TDS+ TCS = 9,000.00

ADVANCE TAX PAID = 8,000.00

SHORT OF 90% OF TOTAL TAX DUE = 2,000.00

234 B = @ 1%PER MONTH ON 2000/-

FROM 01.04.2006 UPTO DATE OF FILING OF RETURN

2000 X 1 X 12
INTEREST U/S 234 B = = 240.00
100
234 C -

BASIS = AS PER INCOME OF PREVIUOS YEAR

LAST YEAR TOTAL TAX PAYABLE = 10,000.00 (INCLUDING E.C)

15.09.2005 30% 30% 3,000.00 3,000.00

15.12.2005 30% 60% 3,000.00 6,000.00

15.03.2006 40% 100% 4,000.00 10,000.00

CURRENT TAX PAYABLE = 15,000.00


RATE 1% PER MONTH
15.09.2005
CURRENT YEAR CALCULATION 4,500.00
LAST YEAR CALCULATION 3,000.00
BALANCE AMOUNT 1,500.00

INTEREST ON BALANCE AMOUNT


1500 X 1 X 3
= = 45.00
100
15.12.2005
CURRENT YEAR CALCULATION 9,000.00
LAST YEAR CALCULATION 6,000.00
BALANCE AMOUNT 3,000.00
INTEREST ON BALANCE AMOUNT
3000 X 1 X 3
= = 90.00
100
15.03.2006
CURRENT YEAR CALCULATION 15,000.00
LAST YEAR CALCULATION 10,000.00
BALANCE AMOUNT 5,000.00

INTEREST ON BALANCE AMOUNT


5000 X 1 X 1
= = 50.00
= = 50.00
100
INTEREST 234 A = 185.00

* IF ADVANCE TAX WAS NOT PAID THEN


234 C = TOTAL TAX PAYABLE X 3.7%
= 555.00
CALCULATION OF 234C
TAX DUE 5,332 (Enculding E.C.)
ADVANCE TAX PAID
14.09.06 700
18.12.06 900
13.03.07 1,250

THEN 234 C
PERIOD 15/09 15/12 15/03
PERCENTAGE 30% 30% 40%
TAX 1,600 1,600 2,132
PERCENTAGE 30% 60% 100%
AS PER 234C 1,600 3,200 5,332
ADVANCE TAX PAID 700 700 2,850
900 2,500 2,482
234C PERCENTAGE 3% 3% 1%
27 75 25

234C = 127

TAX CALCULATION OF AGRILCALTURAL INCOME

TAXABLE INCOME 153,000.00


AGRICULTURAL INCOME 150,000.00

THEN TAX = Tax on (T.I.+ A. I.)


(-) Tax on (Egimition + A. I.)
Net Tax Due

35,600.00
25,000.00
= 10,600.00

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