The due date to file the ITR is always defined and if you miss the deadline to file your ITR, you might face the consequences like paying interest as per section 234A of income tax act.
What is Section 234A?
As we know, ITR for a particular Financial Year needs to be filed within the prescribed time limit i.e, 31st July of the next financial year when a tax audit is not applicable. Hence, if you fail to file your return within that prescribed time, you will be liable to pay interest u/s 234A. In that case, you will be in one of the following three situations :
- You have outstanding taxes to pay to the IT department
- You are eligible for a tax refund from the IT department
- Your taxes have been paid on time with no refund expected or taxes payable.
If you fall under the 2nd or 3rd situation, you need not worry about attracting interest for not filing your ITR on time.
Apart from 234A, following interest/fee are also covered under section 234:
- Delay in payment of Advance Tax – Section 234B
- Deferred payment of Advance Tax – Section 234C
- Fee for late filing of ITR – Section 234F
When will interest u/s 234A be levied?
Interest u/s 234A is levied from the first day after the due date till the actual date of paying the taxes. For example, the due date to file ITR for AY 2022-23 is 31st July 2022 for non tax audit cases. If a taxpayer misses the due date, then interest u/s 234A will be levied. The interest u/s 234A will be imposed from 1st August 2022 till the date they have their taxes paid.
Rate of Interest applicable u/s 234A
Interest is applicable at 1% per month or part of a month. The nature of interest is simple interest.
Calculation of Interest u/s 234A
Let’s understand the calculation through an example.
Karan is an engineer. The due date for filing ITR is 31st July 2022. However, he filed it on 8th December 2022. His tax liability as per tax rates comes to INR 10,550.
In this case, as Karan filed his ITR after the due date, 1% of his total tax liability will be added for each month of delay, as interest under Section 234A.
So total interest amount = INR 10,550 x 1% per month x 5 months (August, September, October, November, December) = INR 528.
So now Karan will have to pay 10,550 (tax) + 528 (interest) = INR 11,078.
Section 234A of Income tax act is levied on taxpayers if they delay in filing their Income Tax Return (ITR). While section 234B of the Income Tax Act is levied upon those taxpayers who default in payment of Advance Tax.
If your gross income is more than the basic exemption limit then you have to file your ITR. In case you miss the deadline and you have outstanding taxes, interest u/s 234A, 234B and 234C will be levied. Additionally, a fee u/s 234F will also be levied.
Yes, even if the due date is extended, interest u/s 234A will be levied.