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Rajiv asked 3 years ago

For F&O Turnover between 16th March to 31st March, as per my understanding when the tax is paid on 31st Match it will attract 1% interest as per Sec 234C (for the month of March). Example, if the tax payable is Rs. 1000, then there will be an interest of Rs. 10 (calculated at 1% for the month of March). And if this is paid on 1st April, the interest payable will be 2% (1% each for March & April). Is that right? When the tax for F&O turnover between 16th March to 31st March is paid on 31st March, which is the type of payment that needs to be selected: will it be the same (100) Advance Tax or will it be (300) Self Assessment Tax?

2 Answers

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A.K Chhoker answered 3 years ago

Simple Understanding of Calculation of interest u/s 234C is given below:

Assessee declaring income u/s 44AD & 44ADA

Assessee declaring income u/s 44AD & 44ADA has to deposit 100% of advance tax upto 15th march.
There is no earlier installments, this is first & last installment.
Where the whole amount of advance tax paid by any assessee on or before 15th March is less than the tax due on the income returned then the assessee shall be liable to pay simple interest @ 1% on the amount of shortfall from the tax due on the returned income.
This was last installment for advance tax, hence interest is calculated only for one month without considering the actual date of payment of this tax. Interest for payment after 31st march is covered u/s 234B hence no interest for payment after 31st march is changed under 234C.

Other assessee:

They are required to pay advance tax in four installment (1) 15% upto 15th June (2) 45% upto 15th September (3) 75% upto 15th December and (4) 100% upto 15% march.
Where the advance tax paid on or before 15th June, 15th September, 15th December is less than 15%, 45% and 75% respectively on the returned income, then they shall be liable to pay simple interest at the rate of 1% per month for a period of three months on the amount of the shortfall. (interest of three months is calculated separately for each installment)
Where the whole amount of advance tax paid by any assessee on or before 15th March is less than the tax due on the income returned then the assessee shall be liable to pay simple interest @ 1% on the amount of shortfall from the tax due on the returned income.
This was last installment for advance tax, hence interest is calculated only for one month without considering the actual date of payment of this tax. Interest for payment after 31st march is covered u/s 234B hence no interest for payment after 31st march is changed under 234C.

Now coming to your question,

If you pay your balance advance tax on 31st March of same FY then you have to pay interest @1% u/s 234C for one month on the amount of shortfall from the tax due on the returned income.
If you pay your balance advance tax after 31st March i.e. 1st April or later , then also you have to pay interest @1% u/s 234C for one month only on the amount of shortfall from the tax due on the returned income.
Delay in payment after 31st march is not covered in 234C, this delay is covered u/s 234B. the more you delay in payment after 31st march the more interest u/s 234B which is charges @1% per month or part of month till the date of payment of tax.

Now coming to your second question, if you are payment your balance advance tax on 31st march then you have to select code 100 (i.e Advance tax.) because all tax paid upto 31st march is advance tax. But if you are paying your tax after 31st march i.e. (1st April or thereafter), then you have to select code 300 (i.e Self assessment tax. ).

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Aditya answered 3 years ago

Interest u/s 234C on last installment if you forgot to pay 100% of your advance tax till 15th March then if you

If you pay this on 16th march:- Interest u/s 234C @1% for one month and no interest u/s 234B.
If you pay on 31st March;- Interest u/s 234C @1% for one month and no interest u/s 234B.
If you pay this on 1st April:- Interest u/s 234C @1% for one month only and interest u/s 234B is 1% for one month.
If you pay this on 15th May;- Interest u/s 234C@1% for one month only and interest u/s 234B is 1% for two months (being 2% in total).
If you pay this on 31st July (at the time of ITR filing):- Interest u/s 234C @ 1% for one month only and interest u/s 234B is 1% for four months (being 4% in total).

Interest 234C is for the period upto 31st march for default in payment of advance tax as per installment schedule. Interest u/s 234C is not charged for after 31st march of same financial year. It tax is not paid even upto 31st march then interest w.e.f 1st April till the actual payment of tax covered by section 234B which is charged @1% per month or part of month.
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