Avoid Interest u/s 234A, Although the CBDT has extended the due date of Filling Income tax returns for Audit cases from Sept 30, 2018, to Oct 15, 2018, vide notification no F. No. 22513581201811TA.11 Dated 24.09.2018 but in the same notification, the CBDT has clarified that there shall be no extension of the due date for purpose of Explanation 1 to section 234A (Interest for defaults in furnishing return) of the act and the assessee shall remain liable for payment of interest as per provisions of the Act. Avoid Interest u/s 234A
Now it’s a confusing situation for many taxpayers and professionals as well that whether they are liable to pay interest u/s 234A of the Act or not?
here the concerned stakeholders advised paying the self-assessment tax by Sept 30, 2018, even they file their ITR by 15th Oct 2018 because It has been held by the Hon’ble Supreme Court in the case of
CIT vs Prannoy Roy, 309 ITR 231 (2009) that the interest under section 234A of the Act on default in furnishing return of income shall be payable only on the amount of tax that has not been deposited before the due date of filing of the income tax return for the relevant assessment year. Accordingly, the present practice of charging interest under section 234A of the Act on self-assessment tax paid before the due date of filing return was reviewed by CBDT. Circular wordings are given as below mention
Avoid Interest u/s 234A
Circular 2/2015
F. No. 385/ 03 /2015-1T(B)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes (CBDT)
North Block, New Delhi
10th February 2015
Subject: Chargeability of Interest under Section 234A of the Income-tax Act. 1961 on self-assessment tax paid before the due date of filing of return of income- regarding Interest under Section 234A of the Income-tax Act, 1961 (hereinafter the Act) is charged in case of default in furnishing return of income by an assessee. The interest is charged at th9 specified rate on the
amount of tax payable on the total income, as reduced by the amount of advance tax, TDS/TCS, any relief of tax allowed under section 90 and section 90A, any deduction allowed under section 91 and any tax credit allowed in accordance with the provisions of section 115JAA and section 115JD of the Act. Since self-assessment tax is not mentioned as a component of tax to be reduced from the amount on which interest under section 234A of the Act is chargeable, interest is being charged on the amount of self-assessment tax paid by the assessee even before the due date of filing of the return.
2. It has been held by the Hon’ble Supreme Court in the case of CIT vs Prannoy Roy, 309 ITR 231
(2009) that the interest under section 234A of the Act on default in furnishing return of income shall be payable only on the amount of tax that has not been deposited before the due date of filing of the income tax return for the relevant assessment year. Accordingly, the present practice of charging interest under section 234A of the Act on self-assessment tax paid before the due date of filing return was reviewed by CBDT.
3. The Board has decided that no interest under section 234A of the Act is chargeable on the amount of self-assessment tax paid by the assessee before the due date of filing of return of income.
4. This Circular may be brought to the notice of all officers for compliance.
5. Hindi version shall follow.
(Sandeep Singh)
Under Secretary to Government of India
To,
1. The Chairperson, Members and all other officers of the CBDT of the rank of Under Secretary and
above
2. All Pr. CCs1T/CCs1T/Pr.DsGIT/DsGIT
3. The Director (PR, PP & OL), Mayur Bhawan, New Delhi for printing in the quarterly tax bulletin and for circulation as per usual mailing list (100 copies)
4.The Comptroller and Auditor General of India (40 copies)
5.The DGIT (Systems), New Delhi for necessary changes in Systems software
6. All Directors of Income Tax, New Delhi
7.All Commissioners of Income-tax (TDS)
8. The Director-General of Income-tax, NADT, Nagpur
9.Guard File
Avoid Interest u/s 234A