2 days nation wide bank strike has led to non-payment of advance tax by many. Can you still pay your advance tax?
We all discussed in our last post about intricacies of advance tax and due dates for payment of advance tax. Still few of us would have missed payment of last installment of advance tax which was due on 15th March 2021. The reason could be many, but the main reason was 2 days nation wide strike on March 15 and 16 called by The United Forum of Bank Union (UFBU), an umbrella body of nine bank unions against the privatisation of Public Sector Banks and retrograde banking reforms.
Since, you have missed payment of advance tax, you will have to pay interest while filing your returns. But, don't worry. I have good news for you. You can still pay your advance tax upto 31st March 2021 and save major interest.
If someone misses payment of first, second and third installment of advance tax, he is liable to pay interest @1% under Section 234C for 3 months for every shortfall in payment of advance tax installment. However, for any shortfall in payment of fourth installment of advance tax, interest @1% for only 1 month is levied i.e. for the month of March. Interest under Section 234C can be levied upto 31st March after which interest under Section 234B is leviable.
Interest under section 234B is applicable when:
1) Your tax liability after reducing TDS is more than Rs 10,000 and you did not pay any advance tax.
2) You paid advance tax, but advance tax paid is less than 90% of ‘assessed tax'.
In any one of the above cases, interest under section 234B shall be applicable. Interest is calculated @ 1% on Assessed Tax less Advance Tax from 1st April of the Assessment Year till the date of filing of Income Tax Return. Part of a month is rounded off to a full month and the amount on which interest is calculated is also rounded off to ignore any fraction of a hundred.
For Example, your total tax liability for the Financial Year is Rs. 2,00,000. You have paid advance taxes till december 15 Rs. 1,50,000. However, you missed 4th instalment on 15th March. In such case, interest @1% on balance Rs. 50,000 for 1 month Rs. 500 will be payable under section 234C. However, if you pay your balance tax by 31st March 2021, you may avoid interest @1% under section 234B which will be effective from 1st April.
Hurry up, if you missed paying your advance taxes. This is your last chance to avoid interest liability. In case you face any difficulty you may contact us. We will be happy to help you.