The Income Tax Act particularly provides the due date of filing an income tax return to the taxpayers across the nation. Any non-compliance with the rules and regulations of the Income Tax Act might bring burden which can lead you to payment of penalties and interest. The interest imposed by the Income Tax Department for not complying with the IT regulations comes under section 234A of the Income Tax Act.
The interest under section 234A is charged for delay in filing of tax returns. However, in case of delay in payment of Advance Tax and Deferred Payment of Advance Tax, interest is charged by the IT Department under Section 234B and Section 234C respectively.
Types of Interest Under the Income Tax Act
There are three different types of interest charged under section 234 namely-
Section 234A- Interest is charged by the IT Department in case of delay in filing income tax returns
Section 234B– Interest is charged by the IT Department in case of delay in payment of Advance Tax
Section 234C– Interest is charged by the IT Department in case of Deferred Payment of Advance Tax
Rate of Interest under Section 234A of the Income Tax Act
The interest under section 234A of the Income Tax Act is charged at the rate of 1%. This interest will be levied for delay in filing income tax returns on the taxpayer. However, there are some of the section 234A interest calculator platforms available on the internet wherein taxpayer can calculate the interest that will be charged by the ITD.
How to Calculate Interest Under Section 234A?
The interest is levied by the Income Tax Department on the amount of tax payable after deducting any advance tax, TDS/TCS or self-assessment tax paid by the assessee.
Although, taxpayers can calculate interest u/s 234A through section 234A interest calculator which is available online, you can calculate the interest by the formula given below-
Interest = Net Tax (After Adjustment) x Period (Months Delayed) x Rate (1% per month)
Section 234A of the Income Tax Act- FAQs
Any taxpayer who has not filed his/her Income Tax Return within the due date specified u/s 139(1) is liable to pay interest u/s 234A.
At present, the rate of interest charged under section 234A of the Income Tax Act is 1% per month.
The official website of Income Tax Department is – https://incometaxindia.gov.in/
