Interest u/s 234C for deferment in payment of advance tax

Any income earned by an assessee during the financial year is taxable immediately in the following assessment year. Individual are liable to pay Advance Tax on estimated income, during a FY if the amount of income tax payable on such estimated income after deducting TDS exceeds ten thousand rupees or more. But in case of any such default Interest u/s 234B and 234C gets attracted.

Interest u/s 234C is attracted for deferment of advance tax beyond the due dates i.e. non-payment of advance tax or payment of underestimated installments of advance tax. Now, let us understand the computation of Interest u/s 234C in case of a

• Non-Corporate Assessee.
• Corporate Assessee. ( Companies)

In the case of a Non-Corporate Assessee:

Individuals are liable to pay advance tax in three installments during each financial year as follows:

Due date of Installment	Amount payable
On or before the 15th September	30% of such advance tax.
On or before the 15th December	60% of total advance tax.
On or before the 15th March	100% of total advance tax

Interest u/s 234C

• The interest liability would be 1% p.m. for a period of 3 months for every deferment.
• However, for last installment of 15^th March, interest would be 1% for 1 month only.
• The interest is calculated on the difference between the amount arrived after applying the specified percentage of tax on returned income and the actual tax paid by the due dates.

In the case of a Corporate Assessee:

A Corporate Assessee are liable to pay advance tax during each financial year as under:

Due date of Installment	Amount payable
On or before 15th June	15% of such advance tax
On or before the 15th September	45% of total advance tax
On or before the 15th December	75% of total advance tax
On or before the 15th March	100% of total advance tax

Interest u/s 234C

• The interest liability would be 1% p.m. for a period of 3 months for every deferment.
• However, for last installment of 15^th March, interest would be 1% for 1month only.
• The interest is calculated on the difference between the amount arrived after applying the specified percentage of tax on returned income and the actual tax paid by the due dates.
• No interest shall be charged u/s 234C for first 2 installments if the company pays advance tax @12% & 36% of the advance tax payable for the year.

The above provision shall be well understood with an example:

Mr. Arjun furnished following details for FY 2011-12 to calculate amount of Interest u/s 234C if the entire tax along with interest was paid on 10/07/2012:

Tax on Total Income: Rs.1, 60,000

TDS Charged : Rs. 10,000

Details of Advance taxes paid:

14/09/2011 Rs.20, 000

12/12/2011 Rs.30, 000

15/03/2012 Rs. 60, 000

Calculation:

Mr. X is an Individual i.e. Non-Corporate Assessee. The computation is of his Interest is shown below:

PARTICULARS	AMOUNT(Rs.)
Tax on Total Income	1,60,000
Less: TDS	(10,000)
ASSESSED TAX	1,50, 000

Interest chargeable u/s 234C is as under:

DUE DATE	AMOUNT PAYABLE	AMOUNT PAID	INTEREST CHARGED
14/09/2011	30% of 1,50,000 = 45, 000	20, 000	25,000*1%*3months = 750
12/12/2011	60% of 1,50,000 = 90, 000	50,000	40,000*1%*3months = 1200
15/03/2012	100% of 1,50,000 = 1,50,000	1,10,000	40,000*1%*1month = 400
TOTAL INTEREST U/S 234C			Rs. 2, 350