Explore The Rate Of Interest Levied On Late Income Tax Payment

MCQ SELF CHALLENGE # 0062 ON INTEREST ON LATE PAYMENT OF INCOME TAX

Interest on Late Payment of Income Tax

Dear Professional Seniors & Friends.

Warm Greetings!

Here is the Next post of #MCQ on concept-based practical professional knowledge on interests applicable to late payment of income tax in a unique manner to be self-answered by participants. The detailed answers to these MCQs shall be posted the next day for the self-assessment of the participants.

MCQ 62.1: Mr. X aged 55 years having income from house property filed the return for AY 2017-18 on 30th October 2017. However, he paid full tax liability of Rs 15,000 on 25th July 2017. What is the interest applicable assuming the due date to file the return is 31st July 2017 and no TDS, or advance taxation services have been paid by him.

Ay Interest under Section 234B & C will be applicable.

B) Interest under Section 234A will be applicable.

C) Both A and B.

D) None of the above.

MCQ 62.2: What if in the above question, Mr. X's age is 62 years?

A) Interest under Section 234B & C will be applicable.

B) Interest under Section 234A will be applicable.

C) Both A and B.

D) None of the above.

Answer MCQ Self Challenge # 0062

This post of MCQ is on provisions relating to various interests applicable under different provisions on late payment of income tax.

Answer to MCQ 62.1: A) Interest under Section 2348 & C will be applicable.

Answer to MCQ 62.2: D) None of the above.

Practical Analysis for MCQ 62.18 62.2:-

1. As per section 208 every person whose estimated tax liability for the year exceeds Rs. 10,000, shall pay his tax in advance in the form of advance tax Thus, any taxpayer whose estimated tax liability for the year exceeds Rs. 10,000 has to pay his tax in advance by the due dates prescribed in this regard.

2. Applicability of various interests under different provisions is defined below-

1) 234A If the assessee does not file the return on the due date or the return is not filed

2) 234B If the advance tax paid by the assessee during the previous year is < 90% of the assessed tax.

3) 234C If the advance tax paid by the assessee during the previous year is << the number of installments to be paid as per prescribed due dates

3. The Hon'ble Supreme Court has held it 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

4. CBDT also reviewed the same order of the High Court and it was confirmed vide Circular No. 02/2015 dated 10th Feb 2015 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.

5. Also as per section 207, a resident senior citizen (e. an individual of the age of 60 years or above) not having any income from business or profession is not liable to pay advance tax e tax

6. Based on the above analysis, correct answer MCQ 1: A) Interest under Section 234B & C will be applicable

7. Correct answer MCQ 61.2: D) None of the above since the assessee is a senior citizen and not having income from PGBP

(Disclaimer: The objective of the MCQ post is just to discuss the concept, it may happen, by change of facts, the answer may be different.

Please do not treat this as a professional opinion: you can definitely have your own opinion.)

Sincere Regards!

CA Sanjay Kumar Agrawal

Mobile: 9810116321