Default in filing income tax return

If a return of income is furnished after the due date or is not furnished, the assessee is liable to pay interest u/s 234A of income tax act.

Index :

• What is section 234A of income tax act?
• When interest is charged u/s 234A ?
• What is the rate of interest u/s 234A ?
• Lastly , How to calculate interest u/s 234A?

What is section 234A of income tax act?

An assessee is required to pay interest u/s 234A ,If he/she fails to file ITR on or before due date. Further, the due date for filing ITR is 31st july of next financial year (If assessee is not falls under tax audit). And it means Income tax return needs to be furnished within prescribed time limit i.e refer due date for filing ITRhttps://taxandfinanceguide.com/section-1391-of-income-tax-act/.

When interest is charged u/s 234A ?

The interest u/s 234A is levied from first day after due date till the actual date of payment.

As i have said, period for which interest is payable is commencing on the date immediately following the due date for filing the return of income and ending on:

a) the date of filing the return (where return has been furnished after due date);

b) or, the date of completion of assessment u/s 144 (where no return has been furnished)

For instance for A.Y. 2023-24 , the due date for filing return of income is 31st july 2023, then the interest under section 234A will be imposed from 1st august 2023 till the actual date of payment of tax.

What is the rate of interest u/s 234A ?

The rate of interest is 1% per month or part of the month (simple interest).

How to calculate interest u/s 234A of income tax act?

As i have said, the rate of interest is 1% per month or part of the month (simple interest). Now we will understand how to calculate interest u/s 234A with the help of an example.

Determination of amount of interest u/s 234A :

Particulars	Mr.B
Due date for filing ITR for A.Y. 2023-24	31st july 23
Date of filing return	September 1, 2023
Date of payment of entire self-assessment tax	September 1, 2023
Date of completion of assessment	September 1, 2023
Income declared	9,80,070
Income assessed	9,85,930
advance tax paid durin 2022-23	26,500
Tax deducted or collected at source	1,188
Interest will be determined as under : period of default -a part of the month is taken as full month	2 months
	Rs.
Income assessed	9,85,930
Tax Add: Health and education cess	1,07,186 4,287
Tax payable on assessed income	1,11,473
Less: Advance tax and Tax deducted or collected at source (26,500+1,188)	(27,688)
Tax payable	83,785
Rounded off	83,700
Interest on 83,700@1% for two months [{83,700*1/100}*2]	1,674