Due date for individual income tax return for the FY 2020-21 (AY 2021-22) has been extended to 30th September, 2021 by the CBDT. Hence, the returns of income which are required to be filed by 31st July, 2021, can be filed upto 30th September, 2021.
However, Tax filing comes with Tax payments and with that comes Interest levy under section 234A/B/C. This interest component and it’s impact gets ignored many times while doing tax estimations and calculations. However, later it has a great impact in amplifying the final tax payable amount.
So let’s first have a look at the sections 234A/B/C of the Income-tax Act, 1961:
Section 234A : Interest for delay in Return Filing – This is levied if Self Assessment tax is not paid up to due date of return filing.
Section 234B : Interest for non/short payment of advance tax – This is applicable if assessee has paid less than 90% of Advance tax payable.
Section 234C : Interest for deferment of Advance tax installments – This shall be levied if Assessee does not pay up to 12%, 36%, 75% and 100% of assessed tax in the quarterly installments of 15th June, 15th September, 15th December and 15th March.
Amongst the above interest sections, relief has been provided only under section 234A stating that the said interest will not be levied up to 30th September 2021 in the case of a taxpayer whose self-assessment tax liability is up to Rs. 1 lakh. However, it is clarified that there will be no extension of date for the payment of self-assessment tax for the taxpayers having self-assessment tax liability exceeding Rs. 1 lakh. In this case, the whole of the self-assessment tax shall be payable by the due dates specified in the Income Tax Act, 1961. i.e. 31st July and delayed payment would attract interest under section 234A. Whereas, in respect of 234B/C which are based on Advance tax payments, there is no relief being provided.
So, in the following two cases listed below, the assessee should not consider 30th September as the due date and should not procrastinate the data finalization, tax calculations and its payment :-
- Self-assessment tax payable is estimated to be above Rs 1 Lakh.
- Sufficient and regular advance tax payments have not been made.
These assessees should aim at the respective due dates under the Act i.e. 31st July so as to get completed with Tax payments as far as possible so as to avoid interest levy. In these turbulent times of COVID-19 and lockdown, businesses as well as individuals are facing high financial crunch and so tax payments itself is going to be an inevitable hit to their pocket. At least, timely payment of the same can avoid the interest levy and thus result in some relief to the assessees!
Author: Ankit Lohiya (Click Here to Visit LinkedIn Profile)
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