SECTION
234A OF THE INCOME-TAX ACT, 1961 - INTEREST FOR DEFAULTS IN FURNISHING
RETURN OF INCOME - CHARGEABILITY OF INTEREST UNDER SECTION 264A ON
SELF-ASSESSMENT TAX PAID BEFORE DUE DATE OF FILING OF RETURN OF INCOME
Interest
under section 234A of the Income-tax Act, 1961 (hereinafter the Act) is
charged in case of default in furnishing return of income by an
assessee. The interest is charged at the specified rate on the amount of
tax payable on the total income, as reduced by the amount of advance
tax, TDS/TCS, any relief of tax allowed under section 90 and section
90A, any deduction allowed under section 91 and any tax credit allowed
in accordance with the provisions of section 115JAA and section 115JD of
the Act. Since self-assessment tax is not mentioned as a component of
tax to be reduced from the amount on which interest under section 234A
of the Act is chargeable, interest is being charged on the amount of
self-assessment tax paid by the assessee even before the due date of
filing of return.
2.
It has been held by the Hon'ble Supreme Court in the case of CIT v.
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 for the relevant assessment year.
Accordingly, the present practice of charging interest under section
234A of the Act on self-assessment tax paid before the due date of
filing return was reviewed by CBDT.
3.
The Board has decided 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.
4. This Circular may be brought to the notice of all officers for compliance.
