Interest on Late Filing Fees

Read the article below to understand the interest calculation on Late Filing Fees

The instructions drawn by the Income Tax Department must be adhered to by the taxpayers. In Section 234 of the Income Tax Act 1961, the following are the three options for filing late fees:

  1. Interest on Delayed tax return filing – Section 234A
  2. Interest on Default in payment of Advance Tax – Section 234 B
  3. Interest on Deferment of Advance Tax – Section 234C


Default in Filing of Tax Returns (Section 234A)

If in case a taxpayer has not paid the taxes to the Income Tax Department within the stipulated time frame in any financial year, then the Section 234A is applicable in order to file the due taxes. Under this section, to file the tax return, the interest is levied at 1% per month or part of a month on the amount of tax which is outstanding and is calculated at the Simple Interest rate. The period on which the amount is calculated from the due date of filing the return till the date when the return is actually filed.

NOTE: The part of a month for which the tax is due is taken to be ‘1 full month’ in the calculation.

Let’s understand the due tax amount calculation from the illustration given below:

 Suppose that Mr. X’s total tax amount which is outstanding is Rs. 50,000 and he files the tax return on 26th November instead of 31st July of the Assessment Year, so he is 5 months late in filing the tax return. So, the interest on the outstanding amount will be calculated as-


Interest = Amount due to x no. of months x interest rate

             = 50,000 x 1/100 x 4 (Here, the total no. of months=4, the full month is taken into consideration).


The interest amount, which is Rs. 125 has to be paid along with the due tax amount which is Rs. 50,000 while income tax return filing

For any help on ITR Filing feel free to consult the tax experts at Taxraahi. You can file ITR yourself via our ITR software or get CA’s help on filing income tax return. You can also use the option of Business Return, and Bulk Return.

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By | 2018-08-08T09:14:20+00:00 June 10th, 2016|Categories: Tax payments and Refund|Tags: , |0 Comments

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