Interest on tax payable – ITR date extension impact
Recently the Government has extended the Income Tax return (ITR) filing date for assesees who are not covered under any audit. The date has been extended to 31st August 2019 from 31st July 2019 earlier.
This was much required this time due to increased disclosure requirements and frequent changes in ITR schema by Income Tax department. Though it is a good relief to get more days to file income tax return, but the question is can we also hold payment of tax till the new extended date.
As per Income Tax Act, the interest is charged on tax payable under following three sections.
- Section 234A – Delay in furnishing of return of Income
- Section 234B – Default in payment of advance tax
- Section 234C – Deferment of advance tax
We will analyse impact under each Section.
- Under Section 234A as the date of filing tax return has been extended, there will be no additional interest liability.
- Section 234B gets attracted when there is any tax liability which requires advance tax to be deposited. If you shift your tax payment from July to August, you are required to pay additional interest at the rate of 1% for the month of August. Earlier this was required to be calculated till July only.
- Section 234C is also applicable when there is advance tax liability, which has not been discharged on quarterly basis. As the interest under Section 234C is till 31st March only, the interest amount doesn’t impacted whether you pay the tax in July or August.
In order to save 1% interest under Section 234B, one should pay tax to Government account in July itself.