Statutory provisions attracted on failure to deduct and deposit Tax.

Where the employer has failed to deduct tax or when short deduction of tax has been done, following statutory provisions are attracted:-

Charging of interest u/s 201(1A) – The deductor is treated to be ‘assessee in default’ in respect of the short deduction/non deduction of tax. Under Section 201(1A) he is liable to pay simple interest @ 1% for every month or part of a month on the amount of tax in arrear from the date on which such tax was deductible to the date on which such tax is actually deducted. Further such interest shall be paid before furnishing the quarterly statement of each quarter.  Charging of interest u/s 201(1A) is mandatory and there is no provision for its waiver.

Procedure for interest calculation

The calculation of interest is to be done as per Rule 119A and is summarized below:

• Where the interest is to be calculated for every month or part of a month comprised in a period, any fraction of a month shall be deemed to be full month and interest shall be so calculated.
• The amount of tax in respect of which interest is to be calculated is to be rounded off to nearest multiple of Rs. 100 ignoring any fraction of Rs. 100.

Penalty u/s 221 - The assessee in default is liable to imposition of penalty where the assessing officer is satisfied that the defaulter has failed to deduct tax as required without good and sufficient reason. The quantum of penalty is not to exceed the amount of tax in arrear. Besides, a reasonable opportunity of being heard is to be given to the assessee.

Penalty u/s 271C – A penalty equivalent to the amount of tax the deductor has failed to deduct, is leviable u/s 271C. Such penalty is however only leviable by a Joint Commissioner of Income Tax.

Where the employee has deducted the tax at source but failed to deposit wholly or partly, the tax so deducted in government account, the following statutory provisions are attracted:-

• Interest u/s 201(1A)- The deductor is treated as an assessee in default and interest u/s 201(1A) is leviable @1.5% for every month or part of the nonth on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid. Further, the tax along with the simple interest u/s 201(1A) becomes a charge upon all the assets of the deductor.
• Penalty u/s 221- Penalty to the extent of tax not deposited is leviable by the A.O. 
• Prosecution proceedings u/s 276 B- Where the deductor has failed to deposit tax deducted at source, in govt. a/c without a reasonable cause then he is punishable with rigorous imprisonment for a term which shall not be less than 3 months but which may extend to 7 years and with fine.

Source: www.tdsman.com

Read More

Interest on Excess Refund granted to the Taxpayer.

At times it may so happen that the taxpayer is granted excess refund. Section 234D provides for levy of interest on excess refund granted to the taxpayer. In this part you can gain knowledge about various provisions relating to interest on excess refund granted to the taxpayer.

Manner of computation of interest under the Income-tax Act Before understanding the provisions of section 234D, it is important to understand the provisions of Rule 119A which gives the manner of computation of interest under the Income-tax Act.

As per Rule 119A, while calculating the interest payable by the taxpayer or the interest payable by the Central Government to the taxpayer under any provision of the Act:

1. where interest is to be calculated on annual basis, the period for which such interest is to be calculated shall be rounded off to a whole month or months. For this purpose, any fraction of a month shall be ignored and the period so rounded off shall be deemed to be the period in respect of which the interest is to be calculated;
2. where the interest is to be calculated for every month or part of a month comprised in a period, any fraction of a month shall be deemed to be a full month and the interest shall be so calculated;
3. the amount of tax, penalty or other sum in respect of which such interest is to be calculated shall be rounded off to the nearest multiple of one hundred rupees. For this purpose any fraction of one hundred rupees shall be ignored and the amount so rounded off shall be deemed to be the amount in respect of which the interest is to be calculated.

Basic provisions

If the taxpayer has paid excess tax, then he will claim the refund of the same in his return of income and it will be refunded to him. Many times it may happen that the taxpayer is granted a refund at initial stage, i.e., at the time of intimation under section 143(1) and at a later stage (i.e., on regular assessment) the refund gets reduced. In such a case the excess refund is recovered from the taxpayer along with interest under section 234D.

Under section 234D interest is levied if any refund is granted to the taxpayer under section 143(1) and:

1. no refund is due on regular assessment; or
2. the amount refunded under section 143(1) exceeds the amount refundable on regular assessment.

Regular assessment generally means an assessment under section 143(3), i.e., scrutiny assessment or an assessment under section 144, i.e., best judgment assessment. 

Assessment made for first time under section 147 or section 153A shall also be treated as regular assessment. 

Rate of interest

Interest under section 234D is levied @ ½ % per month or part of the month.

Period of levy of interest

Interest is levied from the date of grant of refund under section 143(1) till the date of regular assessment.

Regular assessment means an assessment under section 143(3) or section 144. Assessment made for first time under section 147 or section 153A shall also be treated as a regular assessment. 

Amount liable for interest

Interest under section 234D is levied on the whole or the excess amount of refund (as the case may be).

Adjustment under Section 234(2)

Where, as a result of an order under section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of the Settlement Commission under sub-section (4) of section 245D, the amount of refund granted under sub-section (1) of section 143 is held to be correctly allowed, either in whole or in part, as the case may be, then, the interest chargeable, if any, under subsection (1) of Section 234 shall be reduced accordingly.

Read More

Interest Rate @ 9.1% for Investment in 'Sukanya Samridhi Account' During 2014-15

Recently, Hon'ble Prime Minister declared by Office Memorandum dated 20-01-2015 the Interest Rate on Investment in "Sukanya Samridhi Account" during Fin. Year 2014-15 is 9.1%.  The scheme of "Sukanya Samridhi Account" is specially for Girl Child which announcement by Finance Minister in his Budget Speech 2014-15.  The details is as under:

SUKANYA SAMRIDHHI ACCOUNT RULES, 2014 - RATE OF INTEREST TO BE ALLOWED ON INVESTMENTS IN SAID SCHEME DURING FINANCIAL YEAR 2014-15

OFFICE MEMORANDUM [F.NO. 2/3/2014.NS-II], DATED 20-1-2015

Subject: Launch of scheme for Girl Child named "Sukanya Samridhhi Account" by Hon'ble Prime Minister - rate of interest reg.

In compliance of announcement by Finance Minister in his Budget Speech 2014-15 the Government of India has introduced a new scheme named "Sukanya Samridhhi Account" vide Notification No.GSR No.863(E), dated 2nd December, 2014. It has been decided to allow 9.1% rate of interest on investments in the scheme during the financial year 2014-15.

This has the approval of Union Finance Minister.

Read More

HC stays Levy of Interest U/s. 234A on I-T returns filed till extended due date of 30.11.2014

Due Date for filing of return of Income for Assessment Year 2014-15 Extended from 30th September, 2014 to 30th November, 2014 in Specified Cases

The CBDT had issued the notification no. F.No.153/53/2014-TPL (Pt.I) dated 26.09.2014 extending the due date to comply with the judgments of various high courts, such as Gujarat, Bombay, Andhra Pradesh and Madras.

High Courts have earlier held that As the due date for filing of the tax audit report was extended till November 30 (due to late Introduction of several changes in Form 3CD), it was logical to also extend the due date for filing of the I-T return also to November 30.

During hearing on the appeal on 22.09.2014 Honourable Gujarat High Court has directed the CBDT to extend the due date for filing of return of income to 30.11.2014 for A.Y. 2014-15 for all purposes, inter-alia, carry forward of losses, allowability of deductions under Sections 80-IA, 80-IB, 80-IC, 80-ID and other sections which requires return to be filed before due date. However, such extension has been granted subject to charge of interest under Section 234A (For delay in filing of Return of Income) for the period commencing from 01-10-2014 and up to the actual date of filling the return of income. Interest under section 234A will not be levied if taxpayer covered under tax audit provisions pays the tax on or before 30.09.2014 despite filing of return after 30.09.2014.

Anita Sumanth, advocate, representing the All India Federation of Tax Practitioners, and an individual petitioner, G Baskar, submitted to the Madras high court that the levy of interest under section 234A of the Income Tax Act,1961 is unjustified and against the provisions of the law. If the penalty was levied, the purpose of extending the due date of filing the I-T return itself was defeated. She submitted that the Gujarat high court order relating to levy of interest under section 234A was only a suggestion or a concession, it was not an interpretation of law and it was opposed to statutory provisions.

Based on the submissions, the Madras high court granted an interim stay on the levy of interest. It held, “I-T returns shall be accepted by tax authorities without insisting upon any payment of interest under section 234A.”

Source: www.tdstaxindia.com

Read More

Interest received through compensation is taxable.

The Supreme Court has come to the rescue of those who had bought flats in Supertech’s controversial towers in Noida, providing them refunds, with compounded interest of 14 per cent. But those opting for this have to pay tax on the interest they receive. Sanjeev Gokhale, a Mumbai-based chartered accountant, says usually, compensation doesn’t attract tax because it is only ‘capital receipt’. But ‘interest’ will attract tax, as it makes good the loss a person incurs. “Usually, while drawing such agreements, the advice is to avoid the word interest and merely say compensation will be paid in case of delay in fulfilling the agreement. But in this case, since the Supreme Court order uses the word ‘interest’, it is likely home buyers will be liable to pay tax on the interest amount. The original amount paid for the flat will not be liable for tax,” he says.

The builder will deduct tax at source (TDS) at 10 per cent, but if a home buyer is in a higher tax bracket, he or she will have to show the interest payment received under other income and pay tax according to the tax slab.

Last week, the Supreme Court directed Supertech to refund the money to those who had booked flats in the Apex and Ceyane Towers and now wanted to opt out of the project. A petition was filed against the real estate firm, saying it had changed the plan of the building from 11 floors to 40 floors without the necessary permission and this would affect the safety of other residents. The court ruled the buildings should be demolished and ordered the builder to refund the money to those who had booked flats. Buyers had paid Rs 70-90 lakh as principal amount. The court also ordered the builder to pay 14 per cent compoundable interest on the amount paid by the home buyers, from 2009 (when work on the two towers began). The two towers had a total of 857 apartments, of which 600 were sold. Of the 600 buyers, 53 have opted for refunds, with the remaining agreeing to the builder’s offer of an alternative flat.

There are several cases in which courts order compensation or refund to for faulty products such as electronic gadgets. But in such cases, it is compensation for a product that isn’t working and, therefore, is capital receipt.

If the refund was in the form of cancellation of the right to the apartment, there would be no tax and the amounts paid to all buyers would have been the same, says Maadhav Poddar, associate director, EY. “But in this case, the amount paid to home buyers will be different because it will depend on how much each buyer had paid for the flat. Even if a refund was merely returning the original amount, there would be no tax, which is also not the case here.” As it is a refund, it doesn’t come under capital gains tax, but will be added to other income and taxed accordingly, he adds.

Sournce: www.business-standard.com

Read More

What are the effect when Income Tax Return filing after due date ?

Income Tax Return filing after due date

Interest u/s 234A:If there is tax due after deducting advance tax ,TDS and self assessment tax then interest will be applicable @1% per month and part thereof up to the date of filing of the return besides interest applicable u/s 234B or 234C.Means this interest is applicable only if there is any tax payable in your return

Loss of Interest on refund:

You may loose interest on refund u/s 244A as delay in filing is attributable to assessee for the period by which you have filed late return.

Audit Report:
Person who are liable to get their accounts audited should get the audit report on or before the due date of filing return i.e 30.09.2011.Audit repot is only to be prepared and not to be filed any where. In simple word or boldly we can say that if audit report has been signed before 30.09.2011 that is enough, you can file return late and report particulars will be filled when ever you filed your income tax return. This is as income tax circular no 5/2007 point no 6

Revised return :

Late /belated return can not be revised .

Some of deductions under subsection 80 are not available for late return.

Due date of income tax return is related to TDS deposit and disallowance u/s 40a(ia).

Due date of Income Tax return is related to tax saving u/s 54,54B,54F and some other issues in capital gain saving account deposit scheme.

Not able to carry forward the losses under various heads:

You are not able to carry forward following type of losses if file return after due date

• Speculation loss business loss excluding loss due to unabsorbed depreciation and capital exp on scientific research
• short term capital loss
• long term capital loss
• loss due to owning and maint. of horse races

However there is no impact on following type of losses even if return is furnished after the due date

• loss from house property
• business loss on account of unabsorbed depreciation and capital expenditure on scientific research.

(though delay can be condoned as per circular 8/2001 DT 16.5.2001 on fulfilling of certain condition) so if you are falls under the ambit of the above points then you should furnish your return up to 31.07.2011or 30.09.2011 as the case may be without any penalty.

Read More

How to calculate Interest u/s. U/S 234A, U/S 234B, U/S 234C & U/S 234D ?

The Income Tax Act provides for charging of interest for non- payment/short payment/deferment in payment of advance tax which is calculated as below:

INTEREST U/S 234A:
For late or non furnishing of return, simple interest @ 1% for every month or part thereof from the due date of filing of return to the date of furnishing of return, on the tax as determined u/s 143(1) or on regular assessment as reduced by TDS/advance tax paid or tax reliefs, if any, under Double Tax Avoidance Agreements with foreign countries.

INTEREST U/S 234B:
For short fall in payment of advance tax by more than 10%, simple interest @ 1% per month or part thereof is chargeable from 1st April of the assessment year to the date of processing u/s 143(1) or to the date of completion of regular assessment, on the tax as determined u/s 143(1) or on regular assessment less advance tax paid/ TDS or tax reliefs, if any, under Double Tax Avoidance Agreements with foreign countries.

INTEREST U/S 234C:
For deferment of advance tax. If advance tax paid by 15th September is less than 30% of advance tax payable, simple interest @ 1% is payable for three months on tax determined on returned income as reduced by TDS/TCS/Amount of advance tax already paid or tax relief, if any, under Double Tax Avoidance Agreement with forgiving contribution. Similarly, if amount of tax paid on or before 15th December is less than 60% of tax due on returned income, interest @ 1% per month is to be charged for 3 months on the amount stated as above. Again, if the advance tax paid by 15th March is less than tax due on returned income, interest @ 1% per month on the shortfall is to be charged for one month.

INTEREST U/S 234D:
Interest @ 0.5% is levied under this Section when any refund is granted to the assessee u/s 143(1) and on regular assessment it is found that either no refund is due or the amount already refunded exceeds the refund determined on regular assessment. The said interest is levied @ 0.5% on the whole or excess amount so refunded for every month or part thereof from the date of grant of refund to the date of such regular assessment.

Read More

Condition to Claim Deduction of House Loan Interest u/s. 24(b) for Asstt. Year 2014-15

There are two main benefits which are available under Income Tax Act, 1961 in relation to Purchase or Construction of House Property which are described as under:

1. Deduction of Interest on Capital borrowed for purchase or construction of House Property under Section 24 (b) of the Income Tax Act, 1961. (Interest paid by house owner on housing loan)
2. Principle amount paid towards Housing loan for  purchase or construction of House Property under Section 80 C of the Income Tax Act, 1961.
3. The amount stamp duty/ Registration charges paid while acquiring property will be allowed deduction U/s 80C.

Section 24(b) of the Act allows deduction from income from houses property on interest on borrowed capital as under:-

1. the deduction is allowed only in case of house property which is owned and is in the occupation of the employee for his own residence. However, if it is actually not occupied by the employee in view of his place of the employment being at other place, his residence in that other place should not be in a building belonging to him.
2. The quantum of deduction allowed as per table below:

Sl. No.	Purpose of borrowing capital	Date of borrowing capital	Maximum Deduction allowable
1	Repair or renewal or reconstruction of the house	Any time	Rs. 30,000/-
2	Acquisition or construction of the house	Before 01.04.1999	Rs. 30,000/-
3	Acquisition or construction of the house	On or after 01.04.1999	Rs. 1,50,000/-

In case of Serial No. 3 above

• The acquisition or constructing of the house should be completed within 3 years from the end of the Fin. Year in which the capital was borrowed. Hence it is necessary for the DDO to have the completion certificate of the house property against which deduction is claimed either from the builder or through self-declaration from the employee.
• Further any prior period interest for the Fin. Years upto the Fin. Year in which the property was acquired and constructed shall be deducted in equal installments for the FY in question and subsequent four Fin. Years. 
• The employee has to furnish before the DDO a certificate from the person to whom any interest is payable on the borrowed capital specifying the amount of interest payable. In case a new loan is taken to repay the earlier loan, then the certificate should also show the details of Principal and Interest of the loan so repaid.

Interest Paid towards housing loan:
     The house property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount payable towards interest on borrowed capital is allowed as deduction under u/s 24(b) of Income tax act.

1. We have to note here Interest payable on barrowed capital is allowed (Interest paid is irreverent here).
2. In case of under construction property, Interest will aggregated from the date of borrowing till the end of the previous year prior to the previous year in which the house is completed and allowed in five successive financial years starting from the year in which the acquisition or construction was completed.
3. In case Assesses is owner of more than one residential property, he may exercise an option to treat any one of the houses to be self occupied and the other houses will be deemed to be let out and annual value of such house will be determined as per Section 23(1)(a) of the Income Tax Act, 1961.

Principle Amount paid towards Housing Loan:
     Any payment made for purchase or construction of a residential house property which is chargeable to tax under the head “Income from House Property” towards any installment or part payment due to any Bank, Financial Institution, Company or Co-Operative Society towards the cost of the house property allotted to him is allowed as deduction U/s 80 C of the Income Tax Act, 1961 to the extent of Rs. 1,00,000 along with other Specified Investments mentioned under Section 80 C of the Income Tax Act, 1961.

Stamp Duty and Registration Charges for a home:
     The amount you pay as stamp duty or registration fee  when you buy a house  can be claimed as deduction under section 80C in the year of purchase of the house.

Read More

Interest, Penalty and Prosecution on failure of TDS Deposit for Asstt. Year 2014-15.

If a person fails to deduct the whole or any part of the tax at source, or, after deducting, fails to pay the whole or any part of the tax to the credit of the Central Government within the prescribed time, he shall be liable to action in accordance with the provisions of section 201 and shall be deemed to be an assessee-in-default in respect of such tax and liable for penal action u/s 221 of the Act. Further Section 201(1A) lays down that such person shall be liable to pay simple interest

1. at 1% for every 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 such tax is deducted; and
2. at one and one-half percent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid.

Such interest, if chargeable, is mandatory in nature and has to be paid before furnishing of quarterly statement of TDS for respective quarter.
 

Section 271C inter alia lays down that if any person fails to deduct whole or any part of tax at source or fails to pay the whole or part of tax under second proviso to section 194B, he shall be liable to pay, by way of penalty, a sum equal to the amount of tax not deducted or paid by him.
 

Further, section 276B lays down that if a person fails to pay to the credit of the Central Government within the prescribed time, as above, the tax deducted at source by him, he shall be punishable with rigorous imprisonment for a term which shall be between 3 months and 7 years, along with fine.

Read More

Taxation of Leave Salary / Leave Encashment.

Leave salary, also known as leave encashment, means that employee will receive the cash for leaves which are not taken by the employees. The leave encashment received during the service period is taxable for all the employees as per the income tax slab applicable to the employee. However, the tax treatment is different for the leave encashment received at the time of retirement/ superannuation. Further, the tax treatment is different for Government employee (Central or State) vis a vis  Non –Government employee as under:  

·   In the case of Central/ State Government employee, any amount received as cash equivalent of leave salary in respect of period of earned leave at his credit at the time of retirement/ superannuation is fully exempt from tax u/s 10(10AA)(i). 

·      In the case of Non-Government employee (i.e., the employee other than an employee of the Central Government or a State Government) leave salary is exempt from the tax u/s 10(10AA) (ii) to the extent of the least of the following:
i] Cash equivalent of the leave salary in respect of the period of earned leave to the credit of an employee only at the time of retirement whether on superannuation or otherwise (earned leave entitlement cannot exceed 30 days for every year of actual service rendered for the employer from whose service he has retired): or
ii] 10 month “Average Salary” or
iii] The amount not chargeable to tax as specified by the Government. (Presently, Rs. 3 Lacs has been specified).
iv] Leave encashment actually received at the time of retirement.
Average salary, as mentioned above, is to be calculated on the basis of average salary during the period of 10 months immediately preceding the retirement/ superannuation.
”Salary” here means basic salary & includes dearness allowances if term of employment so provided. It also includes commission based on a fixed percentage of turnover achieved by an employee as per term of contract of employment but excludes all other allowances & perquisites.

Now, with above basic brief up about taxability of leave salary, the opinions on the issue raised in your queries are as under:

1.      Leave salary received at the time of retirement is exempt only in the hands of State or Central Government employee. It will not be exempt in the hands of the employee of PSU or Local Authorities. The definition of “Government Employee” is not specifically given in the Income Tax Act-1961. However, the Act has specifically incorporated the PSU employees, Government undertaking employee, Local Authorities employees etc in various other Sections / clauses in the Income Tax Act-1961 where the benefit is meant to be conferred to them. The same is not there in Section 10(10AA).

2.      The Leave Salary is taxable under the head “Income from Salary”. The Salary Income is taxable in the year in which it has accrued or in the year in which it is received, whichever is earlier. Accordingly, the leave encashment is taxable as income of the FY 2012-13 and not FY 2013-14.

TAXABILITY OF LEAVE SALARY AT A GLANCE:

S.No.	Particulars	Tax Treatment
A]	Encashment of leave during service	It is charged to tax.
B]	Encashment of leave at the time of retirement
	1. If Central or State Government Employees	Fully exempt from tax u/s 10(10AA)(i)
	2. For any other employees	Lease of the following is exempt: 1. Earned leave months x Average salary 2. Avg. monthly salary x 10 3. Maximum amount Rs. 3,00,000/- 4. Actually received

Source: The Hitwada News Paper

Read More

Calculate Interest u/s. 234A, 234B, 234C.

The Income Tax Act provides for charging of interest for non- payment/short payment/deferment in payment of advance tax which is calculated as below:

INTEREST U/S 234A: For late or non furnishing of return, simple interest @ 1% for every month or part thereof from the due date of filing of return to the date of furnishing of return, on the tax as determined u/s 143(1) or on regular assessment as reduced by TDS/advance tax paid or tax reliefs, if any, under Double Tax Avoidance Agreements with foreign countries.

INTEREST U/S 234B: For short fall in payment of advance tax by more than 10%,simple interest @ 1% per month or part thereof is chargeable from 1st April of the assessment year to the date of processing u/s 143(1) or to the date of completion of regular assessment, on the tax as determined u/s 143(1) or on regular assessment less advance tax paid/ TDS or tax reliefs, if any, under Double Tax Avoidance Agreements with foreign countries.

INTEREST U/S 234C: For deferment of advance tax. If advance tax paid by 15th September is less than 30% of advance tax payable, simple interest @ 1% is payable for three months on tax determined on returned income as reduced by TDS/TCS/Amount of advance tax already paid or tax relief, if any, under Double Tax Avoidance Agreement with forgiving contribution. Similarly, if amount of tax paid on or before 15th December is less than 60% of tax due on returned income, interest @ 1% per month is to be charged for 3 months on the amount stated as above. Again, if the advance tax paid by 15th March is less than tax due on returned income, interest @ 1% per month on the shortfall is to be charged for one month.

INTEREST U/S 234D: Interest @ 0.5% is levied under this Section when any refund is granted to the assessee u/s 143(1) and on regular assessment it is found that either no refund is due or the amount already refunded exceeds the refund determined on regular assessment. The said interest is levied @ 0.5% on the whole or excess amount so refunded for every month or part thereof from the date of grant of refund to the date of such regular assessment.

Free Download Click Here 

(Developed by- CA Prakash Dugar)

Read More

Actually TDS Deductor Pay 3% Interest on Late Deposit of TDS by 1 Day, How?

Tax Deducted at Source or Tax Collection at source is the important part of revenue (TAX) collection of Government.  Every Employer knows only 1.5% Interest rate on late deposit of TDS Payment, but they forget they pay 3% Interest to Government.  After deducting TDS from specified payments, are deliberately not depositing the taxes so deducted in Government account and continue to deploy the funds so retained for business purposes or for personal use. CBDT is stressing on compliance of the due date of deposit of tds by the deductor.

Interest Calculation procedure on Late Deposit of TDS by 1 Day:
TDS Deductor deducted TDS in the Month of August-13, It means Due date of this deduction of TDS payment will be comes on 7th Day of September, 2013.  If TDS Deductor deposit TDS on or after 08th Day of September, 2013 i.e. one day delay regarding Depositing of TDS Payment.  Interest will be applicable for 2 months from 01.08.13(date of deduction) to 08.09.13 (date of deposit) for two months @1.5 % per month = 3%

Therefore, TDS payment don't deposit late.

Read More

Free Download Interest Calculator u/s. 234A, 234B, 234C & 234D to Pay Interest for A.Y. 2013-14

The Income Tax Act provides for charging of interest for non- payment/short payment/deferment in payment of advance tax which is calculated as below:

INTEREST U/S 234A: For late or non furnishing of return, simple interest @ 1% for every month or part thereof from the due date of filing of return to the date of furnishing of return, on the tax as determined u/s 143(1) or on regular assessment as reduced by TDS/advance tax paid or tax reliefs, if any, under Double Tax Avoidance Agreements with foreign countries.

INTEREST U/S 234B: For short fall in payment of advance tax by more than 10%,simple interest @ 1% per month or part thereof is chargeable from 1st April of the assessment year to the date of processing u/s 143(1) or to the date of completion of regular assessment, on the tax as determined u/s 143(1) or on regular assessment less advance tax paid/ TDS or tax reliefs, if any, under Double Tax Avoidance Agreements with foreign countries.

INTEREST U/S 234C: For deferment of advance tax. If advance tax paid by 15th September is less than 30% of advance tax payable, simple interest @ 1% is payable for three months on tax determined on returned income as reduced by TDS/TCS/Amount of advance tax already paid or tax relief, if any, under Double Tax Avoidance Agreement with forgiving contribution. Similarly, if amount of tax paid on or before 15th December is less than 60% of tax due on returned income, interest @ 1% per month is to be charged for 3 months on the amount stated as above. Again, if the advance tax paid by 15th March is less than tax due on returned income, interest @ 1% per month on the shortfall is to be charged for one month.

INTEREST U/S 234D: Interest @ 0.5% is levied under this Section when any refund is granted to the assessee u/s 143(1) and on regular assessment it is found that either no refund is due or the amount already refunded exceeds the refund determined on regular assessment. The said interest is levied @ 0.5% on the whole or excess amount so refunded for every month or part thereof from the date of grant of refund to the date of such regular assessment.

Free Download Click Here 

(Developed by- CA Prakash Dugar)

Read More

Deduction of Tax at Source-Interest Other Than Interest on Securities u/s. 194A of Notified Institution.

Income Tax Department has been issued a notification regarding Deduction of Tax at Source u/s. 194A for Interest other Than Interest on Securities for notified Institution vide Notification No. 4/2013 [F.NO.275/28/2012-IT(B)], Dated 24-1-2013 regarding Central Government hereby notifies the National Skill Development Fund.

SECTION 194A OF THE INCOME-TAX ACT, 1961 - DEDUCTION OF TAX AT SOURCE - INTEREST OTHER THAN INTEREST ON SECURITIES - NOTIFIED INSTITUTION

NOTIFICATION NO. 4/2013 [F.NO.275/28/2012-IT(B)], DATED 24-1-2013

In exercise of the powers conferred by sub-clause (f) of clause (iii) of sub-section (3) of section 194A of the Income-tax Act, 1961 the Central Government hereby notifies the National Skill Development Fund (PAN AABTN5824G) for the purpose of sub-clause (f) clause (iii) of sub-section (3) of said section.

Read More

Interest Calculator for multy types of Loan Free Download.

In respect of loan Interest there are many calculators in many sites and on blogs also.  Although they are very useful and best but on the contrary they are for individual scheme.  Now, I develop multy scheme Interest Calculator for Salaried Employee and Other borrowers to Calculate their interest with EMI and Debited Principal Loan Amount.

Types of Loan:
1. Personal Loan,
2. Housing Loan,
3. Car Loan,
4. Education Loan,
5. Term Loan etc.

The device is crafted so as to provide you with the emi figure that one would be paying back to them every month.  It is recommended to take the help to calculator Interest on Personal, Housing Loan/Home Loan, Car Loan, Education Loan and Term Loan.

Download Interest Calculator for All Types of Loans (Click Here)

Read More

On failure to Tax Deposit, what are Penalty, Fee, Interest and Prosecution?

If a person fails to deduct the whole or any part of the tax at source, or, after deducting, fails to pay the whole or any part of the tax to the credit of the Central Government within the prescribed time as under:

He shall be liable to action in accordance with the provisions of section 201. Section 201(1A) lays down that such person shall be liable to pay simple interest

1. at 1% for every 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 such tax is deducted and
2. at one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid.

Such interest, if chargeable, is mandatory in nature and has to be paid before furnishing of quarterly statement of TDS for respective quarter.

Section 271C lays down that if any person fails to deduct whole or any part of tax at source or fails to pay the whole or part of tax deducted, he shall be liable to pay, by way of penalty, a sum equal to the amount of tax not deducted or paid by him.

Further, section 276B lays down that if a person fails to pay to the credit of the Central Government within the prescribed time, as above, the tax deducted at source by him, he shall be punishable with rigorous imprisonment for a term which shall be between 3 months and 7 years, along fine.

Read More

Deduction of Housing Loan Interest & Principal Amount.

Section 24(b) of the Act allows deduction from income from house property on interest on borrowed capital as under:-

(i)  the deduction is allowed only in case of house property which is owned and in the occupation of the employee for his own residence. However, if it is not actually occupied by the employee in view of his place of the employment being at other place, his residence in that other place should not be in a building belonging to him.

(ii)  The quantum of deduction allowed as per table below:

Sl. No	Purpose of borrowing capital	Date of borrowing capital	Maximum Deduction allowable
1	Repair or renewal or reconstruction of the house	Any time	Rs. 30,000/-
2	Acquisition or construction of the house	Before 01.04.1999	Rs. 30,000/-
3	Acquisition or construction of the house	On or after 01.04.1999	Rs. 1,50,000/-

In case of Serial No. 3 above

(a)  The house so acquired or constructed should be completed within3 years from the end of the FY in which the capital was borrowed. Hence it is necessary for the DDO to have the completion certificate of the house property against which deduction is claimed either from the builder or through self-declaration from the employee.

(b)  Further any prior period interest for the FYs up to the FY in which the property was acquired and constructed shall be deducted in equal instalments for the FY in question and subsequent four FYs.

(c)  The employee has to furnish before the DDO a certificate from the person to whom any interest is payable on the borrowed capital specifying the amount of interest payable. In case a new loan is taken to repay the earlier loan, then the certificate should also show the comprehensive picture of Principal and Interest of the loan so repaid.

Read More

Post Office (Monthly Income Account) Amendment Rules, 2012 Increases Interest Rate as 8.50% w.e.f. 01.04.2012

POST OFFICE (MONTHLY INCOME ACCOUNT) AMENDMENT RULES, 2012 - AMENDMENT IN RULE 8

NOTIFICATION NO.GSR 322(E), DATED 25-4-2012

In exercise of the powers conferred by section 15 of the Government Savings Banks Act, 1873 (5 of 1873), the Central Government hereby makes the following rules further to amend the Post Office (Monthly Income Account) Rules, 1987, namely:-

1. (1) These rules may be called the Post Office (Monthly Income Account) Amendment Rules, 2012.

(2) They shall deemed to have come into force on the 1st day of April, 2012.

2. In the Post Office (Monthly Income Account) Rules, 1987,—

(a) in rule 8, in sub-rule (1), after clause (i), the following clause shall be inserted, namely: -

"(j) 8.5 per cent per annum in respect of deposits made on or after the 1st day of April, 2012.".

Read More

Late filing of Income Tax Return may effect by penalties.

Due to late filing of Income Tax Return may effect on Interest u/s 234A, Loss of Interest on Retund, Audit Report and Revised Return etc. Therefore, taxpayee request you to avoid all impact of late filing of Income Tax Return for Assessment year 2012-13

Interest u/s 234A:
If there is tax due after deducting advance tax ,TDS and self assessment tax than interest will be applicable @1% per month and part thereof up to the date of filing of the return besides interest applicable u/s 234B or 234C.Means this interest is applicable only if there is any tax payable in your return .(INTEREST calculator 234BC online is available here)

Loss of Interest on refund:
You may loose interest on refund u/s 244A as delay in filing is attributable to assessee for the period by which you have filed late return.

Audit Report:
Person who are liable to get their accounts audited should get the audit report on or before the due date of filing return i.e 30.09.2012.Audit repot is only to be prepared and not to be filed any where.In simple word or boldly we can say that if audit report has been signed before 30.09.2011 that is enough,you can file return late and report particulars will be filled when ever you filed your income tax return.This is as income tax circular no 5/2007 point no 6 (read full circular)

Revised return :
Late /belated return can not be revised .This is major draw back .if you failed to file return in time then you can revise your income tax return. Though you may apply revision u/s154 which is lenghty process 

• Some of deduction under subsection 80 are not available for late return.
• Due date of income tax return is related to TDS deposite and disallowance u/s 40a(ia).
• Due date of Income Tax return is related to tax saving u/s 54,54B,54F and some other issues in capital gain saving account deposit scheme.
• Not able to carry forward the losses under various heads:you are not able to carry forward following type of losses if file return after due date

Read More

Revision of interest rates for small savings schemes.

Dear Visitors earlier we know that the small saving schemes rates has been revided from 01.11.2011 and now from 01.04.2012 the new revised Rate on Small Saving Schemes are declared by Ministry of Finance, Department of Economic Affairs (Budget Division) on 26th March 2012. The Office Memorandum as as below:

No.61/2011-NS-II(Pt.)
Ministry of Finance
Department of Economic Affairs
(Budget Division)
--------------------------------------------------------------------------

New Delhi, the 26th March, 2012

Office Memorandum

Sub: Revision of interest rates for small savings schemes.

The undersigned is directed to refer to Ministry of Finance's O.M. of even number dated 11th November, 2011, vide which the various decisions taken by the Government on the recommendations of the Shyamala Gopinath Committee for Comprehensive Review of National Small Savings Fund (NSSF), were communicated to all concerned.

2. One of the decisions of the Government based on the recommendations of the Committee relates to revision of interest rates every financial year, to be notified before rt April of that year. Accordingly, the rates of interest on various small savings schemes for the financial year 2012-13 effective from 1.4.2012, on the basis of the interest compounding/payment built-in in the schemes, shall be as under:

Schemes	w.e.f. 1.12.2011	w.e.f. 1.4.2012
Savings Deposit	4	4
1 year Time Deposit	7.7	8.2
2 year Time Deposit	7.8	8.3
3 year Time Deposit	8	8.4
5 year Time Deposit	8.3	8.5
5 year Recurring Deposit	8	8.4
5 year SCSS	9	9.3
5 year MIS	8.2	8.5
5 year NSC	8.4	8.6
10 year NISC	8.7	8.9
PPF	8.6	8.8

3. Necessary notifications, including these requiring amendments to rule of small savings schemes will be notified separately.

4. This has the approved of Finance Ministry.

Sd/-
(Shaktikanta Das)
Addl. Scretary of the Govt. of India.

Tags: Interest Rates, Interest Calculator, PPF Interest, GPF Interest, EPF Interest

Read More