1. Types of Interest
There are 3 different interests under section 234: Delays in completing Tax Returns - Section 234A Advance Tax Payment Delays - Section 234B Deferred Tax Payment - Section 234C
Frequently Asked Questions
Say, your remaining tax amount on FY 2018-19 is Rs 1 lakh (prepaid tax and TDS if applicable) and you submit your refund by March 31, 2020 instead of 31 August 2019, the deadline to introduce income tax. return of FY 2018-19. You are now 7 months late in your tax payment. Interest = 100,000 x 1% x 7 = Rs. 7,000 This Rs. 7,000 is more than the amount of tax you will be paying anywhere. If you do not include your refund at all, you will have to pay 1% interest until the end of the testing year which is 31 March.
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