Section 234B ITA 1961 prescribes INTEREST FOR DEFAULT IN PAYMENT OF ADVANCE TAX:
Aonly if no return is filed (cf. Income Tax Act 1961, Sections 234A, 234B, 234C) (cf. Income Tax Act 1961, Sections 234A, 234B, 234C)
Bno interest (cf. Income Tax Act 1961, Sections 234A, 234B, 234C) (cf. Income Tax Act 1961, Sections 234A, 234B, 234C)
Cat 1% per year (cf. Income Tax Act 1961, Sections 234A, 234B, 234C) (cf. Income Tax Act 1961, Sections 234A, 234B, 234C)
Dat 1% per month or part of a month — on tax payable from 1st April of the assessment year until determination/payment of tax
Answer & Solution
Correct answer: D. at 1% per month or part of a month — on tax payable from 1st April of the assessment year until determination/payment of tax
1. Section 234A — interest for LATE FILING OF RETURN at 1% per month from due date until filing.
2. Section 234B — INTEREST FOR DEFAULT in ADVANCE TAX PAYMENT — 1% per month from 1 April of AY until tax is paid; applies if advance tax paid is less than 90% of assessed tax.
3. Section 234C — interest for DEFERMENT in advance tax instalments — quarterly interest at 1% for shortfall.
4. Section 220 — interest for delayed tax payment: 1.5% per month after notice of demand.
5. The TRIPLE (234A + B + C) creates significant cost of non-compliance.
6. Hence option B is correct.
_Source: CS Executive Paper 4 Tax Laws (ICSI BoS) + Income Tax Act 1961 + CGST Act 2017 — Income Tax Act 1961, Sections 234A, 234B, 234C_
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