Advancetaxinterestprovision

1. Samuel S Kondeti

2.  Section 207:Advance tax is payable on the total
income (including on the income of capital gains
and casual incomes )which is chargeable to tax in
the A.Y immediately following that F.Y. Such
income is termed as “current income”.
 The Tax is Paid as income is earned
 This Scheme of Advance Payment of Tax is also
Called as Pay as you earn income

3.  Section 208: Tax is Paid in Advance when Tax Liability is More
than Rs.10,000.
 Section 209: From the income tax liability, TDS has to be
reduced and the balance shall be payable as per installments
mentioned in section 211.
 Section 210: It is obligatory for every person to pay advance tax
according to his/her estimate without any notice from the A.O.
However, the A.O is also empowered to issue a notice to any
person liable to pay advance tax under Sec.210,directing him to
pay tax. This notice can be sent latest by the last day of the
February of the previous year.

4.  Section 211: Advance tax shall be payable as per following installments.
 Due Date for Advance Tax Payment
Due date of installment Amount payable
 Companies
 On or before 15/06/PY 15% of advance tax payable
 On or before 15/09/PY 45% of advance tax payable as reduced by any amount already
paid.
 On or before 15/12/PY 75% of advance tax payable as reduced by any amount already
paid.
 On or before 15/03/PY 100% of advance tax payable as reduced by the amount already
paid.
 Other than Companies
 On or before 15/09/PY 30% of advance tax payable.
 On or before 15/12/PY 60% of advance tax payable as reduced by any amount already
paid.
 On or before 15/03/PY 100% of advance tax payable as reduced by the amount already
paid.

5.  Section 211B: If assessee does not pay advance tax
when he is liable to pay then he will be deemed to be
assessee in default.
 Consequences for non-payment of advance tax shall be
 Assessee is known as assessee in default.
 Assessee shall be liable to pay interest under section 234C
and section 234B.
 Assessee shall be liable to pay penalty under section
140A(3) which can be maximum of 100% of such tax.

6. Interest on
Tax Liability
Payable by
Assesse
Receivable
by Assesse

7.  Payable By Assesse
Section 234A
Section 234B
Section 234C
Section 234D
 Section 220(2)
Section 201(1A)
 Receivable by
Assesse
 Section 244A

8.  1. INTEREST U/S 201(1A)
 If the person responsible for deducting
tax at source does not deduct tax at source, wholly
or partly, under section 192 to 196C or after
deducting tax fails to pay the same as required by
Act, he is liable to pay interest. Interest is
calculated at the rate of 12% per annum { w.e.f.
1/04/2008 at the rate of 1% per month or part of
the month } on the amount of such tax from the
date on which such tax was deductible to the date
on which the tax is actually paid.

9.  If any assessee fails to pay any tax ( other
than advance tax) specified in a demand
notice within 30 days of the service of notice
of demand, he is liable to pay interest at the
rate of 1% per month or part of month from
the expiry of 30 days of the service of notice
of demand.

10. For Delay or Failure in Furnishing The Return
Interest at 1% on Tax Liability
For Calculation of Interest Part of Month is Taken as a
Month
Period of Interest Payable
In case of Companies or Assessee covered under Tax Audit
From 1st October of the Assessment year to the Date of
Furnishing the return of Income
In case of any other Assessee From 1st August of the
Assessment year to the Date of Furnishing the return of
Income

11.  Rate of Interest : 1% per month of part of month
 When payable :
 1) Failed to pay advance tax or
 2) paid advance tax is less than 90% of assessed tax
 ( Assessed tax = Tax on Income u/s 143(1) or u/s 143(3) –
TDS paid )
 { If interest under section 234B is to be calculated for
the purpose of self assessment under section
140A , then “assessed tax” means tax on returned
income – TDS paid }
 Amount on which interest is payable :
 1) Assessed Tax or
 2) Assessed tax minus advance tax paid
 Period for which interest is payable :
 From 01st April of the A.Y. to the date of determination of
Income u/s 143(1) or where regular assessment is made to the
date of regular assessment

12.  Adjustment when tax is paid before regular assessment under section 140A :
 If before the determination of total income u/s 143(1) or completion of a regular
assessment tax is paid on the basis of self–assessment, the interest shall be
calculated as under :
 a) up to the date of payment of tax u/s 140A, interest will be calculated as
mentioned above { i.e. (Tax determined – TDS/TCS-Advance tax) X ( Period
w.e.f. 1st April of A.Y. to the date of payment of tax u/s 140A) X 1%}
 b) from the date of payment of tax u/s 140A, interest will be calculated on
the amount by which advance tax and tax paid u/s 140A falls short of assessed tax.
{ i.e. [Tax determined – TDS/TCS-Advance tax- (tax paid u/s 140A – Interest
chargeable u/s 234A, 234C and 234B {as calculated in clause (a) above})] X (
Period w.e.f. date of payment of tax u/s 140A to the date of assessment u/s 143(1)
or regular assessment) X 1%}
 If as a result of an order under section 154, 155, 250, 254, 262, 263, 264 and
245D, the interest payable is increased or reduced, as the case may be, the interest
shall be increased/ reduced accordingly.

13. Interest is
Payable
Interest Rate Liable Tax
Amount
Period
If Advance Tax
is paid on or
before
September 15 is
Less than 30%
If Advance Tax
is paid on or
before
December 15 is
Less than 60%
If Advance Tax
is paid on or
1% for every
month or Part of
Month
1% for every
month or Part of
Month
1% for every
month or Part of
Month
30% on Tax
Amount Minus
Advance Tax
Paid
60% on Tax
Amount Minus
Advance Tax
Paid
Tax Amount
Minus Advance
Tax Paid
3 Months
3 Months
Nil

14. Interest is
Payable
Interest Rate Liable Tax
Amount
Period
If Advance Tax
is paid on or
before
June 15 is Less
than 15%
If Advance Tax
is paid on or
before
September 15 is
Less than 45%
If Advance Tax
is paid on or
1% for every
month or Part of
Month
1% for every
month or Part of
Month
1% for every
month or Part of
Month
15% on Tax
Amount Minus
Advance Tax
Paid
45% on Tax
Amount Minus
Advance Tax
Paid
75% on Tax
Amount Minus
3 Months
3 Months
3 Months

15. Where the amount refund Granted to Assessee exceeds the
amount refundable on regular assessment or
 Where the refund granted is not due on regular
assessment,
 Interest at 0.5% for every Month, a part of Month is also
consider as a Month,
 Period is from Date of grant of refund to the date of such
regular assessment.

16.  Interest is payable where any refund arises due
to any excess payment of tax.
 Rate of Interest : 0.5% per month or part of
month
 Period : 1. Where the refund is due to excess
payment of advance tax/TDS/TCS/advance
fringe benefit tax, interest is calculated from
the 1st day of A.Y. to the date of grant of refund
( i.e. the date of signing of the refund order ).
 2. Where the refund is due to excess
payment of self assessment tax, interest is
calculated from the date of assessment order to
the date of grant of refund ( i.e. the date of
signing of the refund order ).

17.  The assessee is not entitled for interest u/s 244A on excess
payment of advance tax/TDS/TCS/advance fringe benefit tax
is payable if excess payment is less than 10% of the tax
determined.
 If the proceedings ( resulting in the refund) are delayed for
reasons attributable to the assessee, the period of the delay so
attributable to him shall be excluded from the period for
which interest is payable.
 If as a result of an order under section 154, 155, 250, 254, 262,
263, 264 and 245D, the amount on which interest was has been
payable is increased/reduced, as the case may be, the interest
shall be increased/ reduced accordingly.
 If the interest is reduced, the Assessing officer will send a
notice of demand in the prescribed form specifying the
amount of excess interest paid and requiring him to pay such
amount.

18. skondeti@rediffmail.com
https://www.facebook.com/samuel.kondeti