Delay in Advance Tax Payment

Taxpayers who are having a tax liability of more than Rs.10,000 should remit Advance Tax to the government before the due date. However, senior citizens who are not having any business income need not pay advance tax. The due date for advance tax payment and procedure for remitting advance tax payment is reckoned as per the provisions of the Income Tax Act. In this article, we look at Section 234B and Section 234C of the Income Tax Act which deals with penalty for delay in advance tax payment.

Due Date for Advance Tax Payment

The due date for advance payment of tax is as follows:

Taxpayer Type By 15th June By 15th September By 15th December By 15th March

All types of taxpayers (other than those who opted for presumptive taxation scheme) Upto 15% of advance tax Upto 45% of advance tax Upto 75% of advance tax Upto 100% of advance tax

Taxpayers who opted for the presumptive taxation scheme NIL NIL NIL Upto 100% of advance tax

Section 234B – Penalty for Not Paying Advance Tax Payment

The penalty under Section 234B of the Income Tax Act is applicable if:

A taxpayer has failed to pay advance tax though he is liable to pay advance tax; or

The advance tax paid by the taxpayer is less than 90% of the assessed tax.

Penalty for Default in Advance Tax Payment

Under section 234B, interest for default in payment of advance tax is levied at 1% simple interest per month or part of a month. The penalty interest is levied on the amount of unpaid advance tax. If there is a shortfall in payment of advance tax, then interest is levied on the amount by which advance tax is short paid.

The penal interest for default in advance tax payment will be levied from 1st April of the relevant financial year till the date of determination of income under Section 143(1) or when a regular assessment is made, then till the date of such a regular assessment.

In case the taxpayer has paid any tax before the completion of the assessment, then interest will be levied as follows:

Upto the date of payment of self-assessment tax, interest will be computed on the amount of unpaid advance tax.

From the date of payment of self-assessment tax, interest will be levied on the unpaid amount of advance tax after deducting the self-assessment tax paid by the taxpayer.

In case income is increased due to an income tax assessment or recomputation, interest will be levied on the differential amount from the first day of the assessment year till the date of assessment/re-computation.

Section 234C – Penalty for Short Payment of Advance Tax

Section 234C is applicable if a taxpayer has paid advance tax which is less than the required amount. Since the advance tax is paid based on estimated tax liability, only tax payment that falls below the threshold below will be liable for a penalty for Section 234C of the Income Tax Act.

Penal interest under Section 234C is levied only if:

Advance tax paid on or before 15th June is less than 12% of advance tax payable.

Advance tax paid on or before 15th September is less than 36% of advance tax payable.

Advance tax paid on or before 15th December is less than 75% of advance tax payable.

Advance tax paid on or before 15th March is less than 100% of advance tax payable

All the income tax returns filed by the taxpayers are first processed online at the Centralised Processing Centre (CPC). After processing the return, the income tax department then issues intimation under section 143(1) to the taxpayers informing them about the results.

If you have received an income tax notice, please do not worry, That May be just Information of ITR Process.

But Also,

An income tax return can be either filed voluntarily under Section 139 or on demand by the income tax department under Section 142(1). It is necessary to understand what happens after the taxpayer has filed the return of income. Income tax department carries out a preliminary assessment of all the returns filed and informs taxpayers of the result of such preliminary assessment. This assessment primarily includes arithmetical errors, internal inconsistencies, tax calculation and verification of tax payment. Such communication to the taxpayer post the preliminary assessment is called intimation under Section 143(1). The preliminary assessment is wholly computerised and does not have any human intervention and is delegated to Centralised Processing Center (CPC).

There is not any direct interest on Late filling of ITR. (this may Impose Penalties)

But, If you do not file income tax returns on or before the due date, you would be required to pay interest at the rate of 1% for every month, or part of a month, on the amount of tax remaining unpaid as per section 234A.

It’s important to note that one’s ITR cannot be filed if one hasn’t paid the taxes.

Penalties :

Late Filing Fees u/s 234F

Effective from the FY 2017-28, a late filing fee will be applicable for filing your returns after the due date under section 234F. For instance after due date for FY 2020-21  which is 31st Dec 2021.

The maximum penalty is Rs. 10,000. If you file your ITR after the due date (30th Sep) but before 31 December, a penalty of Rs 5000 will be levied.

For returns filed later than 31 December of the relevant assessment year, the penalty levied will be increased to Rs.10,000.

There is a relief given to small taxpayers – the IT department has stated that if the total income does not exceed Rs 5 lakh, the maximum penalty levied for delay will be Rs 1000.

​​​​​​TONNAGE TAX​

• In case of a company, the income from the business of operating qualifying ships, may, at its option, be computed in accordance with the provisions of Chapter XII-G.
• Thus, tonnage taxation is a scheme of presumptive taxation wherein notional income arising from operation of ships is determined on basis of tonnage of ships.

Special provisions relating to income of shipping companies

• Section – 115V : Definitions.
• Section – 115VA : Computation of profits and gains from the business of operating qualifying ships.
• Section – 115VB : Operating ships.
• Section – 115VC : Qualifying company.
• Section – 115VD : Qualifying ship.
• Section – 115VE : Manner of computation of income under tonnage tax scheme
• Section – 115VF : Tonnage income.
• Section – 115VG : Computation of tonnage income.
• Section – 115VH : Calculation in case of joint operation, etc.
• Section – 115V-I : Relevant shipping income.
• Section – 115VJ : Treatment of common costs.
• Section – 115VK : Depreciation.
• Section – 115VL : General exclusion of deduction and set off, etc.
• Section – 115VM : Exclusion of loss.
• Section – 115VN : Chargeable gains from transfer of tonnage tax assets.
• Section – 115V-O : Exclusion from provisions of section 115JB.
• Section – 115VP : Method and time of opting for tonnage tax scheme.
• Section – 115VQ : Period for which tonnage tax option to remain in force.
• Section – 115VR : Renewal of tonnage tax scheme.
• Section – 115VS : Prohibition to opt for tonnage tax scheme in certain cases.
• Section – 115VT : Transfer of profits to Tonnage Tax Reserve Account.
• Section – 115VU : Minimum training requirement for tonnage tax company.
• Section – 115VV : Limit for charter in of tonnage
• Section – 115VW : Maintenance and audit of accounts.
• Section – 115VX : Determination of tonnage.
• Section – 115VY : Amalgamation.
• Section – 115VZ : Demerger.
• Section – 115VZA : Effect of temporarily ceasing to operate qualifying ships.
• Section – 115VZB : Avoidance of tax.
• Section – 115VZC : Exclusion from tonnage tax scheme.