Advance Tax and How to Avoid Interest on Advance Tax
(i) Section 234 (A):
If there is default in the filing of Income Tax Return by 31st July (due date of filing Income Tax Return); there may be three conditions i.e. payment of income tax is outstanding on due date, no amount is outstanding on due date, or refund is receivable from income tax department.
If there is outstanding amount of tax
then simple interest of 1% per month will be charged on the period from the due
date of filing income tax return to the actual date of filing income tax
return.
For example:
Mr. A is filing his Income Tax Return on 15th
September while the due date was 31st July and the outstanding
amount of tax is Rs. 50000.
Then he will be charged an interest of Rs. 1000 (50000x1%x2).
The 15 days period will be treated as a month.
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