Section 234A: Interest for delay in filing the return of income

Shubhangi Jain

22 Jun, 2023

Every assessee in India is obligated to file an income tax return and make the timely payment of income tax. The Income Tax rules provide that an individual earning a specific amount of income per year must pay income tax. The government would incur heavy charges consequential to non-payment of the tax or the non-filing of ITR by the assessee. Following sections 234A, 234B, and 234C of the Income Tax Act, this penalty is assessed as interest. The present article shall discuss the Section 234A Interest for delay in filing the return of income.

Section 234A: Meaning

The interest shall be charged if the assesse fails in filing the return within the required window or fails in the filing at all. Interest under section 234A will be assessed upon the submission of an income tax return by the assessee after the deadline established by the department.

Section 234A: Rate of Interest

The rate of interest is imposed for the delay in filing the income tax return (ITR). Interest is imposed at 1% per month or part of a month. The nature of interest is simple interest. In other words, the assessee is liable to pay simple interest at 1%  / month or part of a month for such delay in filing the income tax return.

Period of imposition of interest under section 234A

The interest imposed from the period starting on the date immediately after the due date of filing the ITR^[1] and ending on the date of furnishing the same, or in the case of the non-furnishing of the return, on the date of completion of the assessment u/s 144. It must be noted that while the computation of the period of levy of interest, part, i.e. the fraction of a month, is considered as a full month

Amount liable to interest under section 234A

 Interest under this section is levied on the amount of tax as ascertained under section 143(1), and where regular assessment is made, the tax on total income as ascertained under such regular assessment has been reduced by tax deducted/collected at source, advance tax, the relief claimed under various sections like sections 89/90/90A/91 and tax credit claimed under section 115JAA/115JD.

Certain Key Considerations

The assessee must note the following –

• Tax on the total income ascertained under section 143(1) won’t include the additional income tax, if any, payable under section 140B or section 143.
• Tax on the total income ascertained  under regular assessment won’t include the additional income tax payable under section 140B

Conclusion

Assesses are given time up to July 31  for the payment of outstanding taxes and filing the income tax returns under Section 234A of the Income Tax Act. To avoid such penalties and fines, the assessee should make sure to check his outstanding tax and pay them on time to the authority. The assessee must seek advice from a qualified professional having extensive experience in this aspect to avoid any further delays in the tax filing process.

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