Due date for filing of Income tax return related to AY 2021-22 ( FY 2020-21) was extended to 30.09.2021 from 31.07.2021 for normal individuals.
However, in the said order it was clarified that the extension shall not apply to explanation 1 to section 234A of the Act, in a case where the amount of tax on the total income as reduced by the amount as specified in clause (i) to (iv) of sub section (1) of that section exceeds Rs. 1 lakh. Relevant extract of clarifications are as under:
“Clarification 1: It is clarified that the extension of the dates as referred to in clauses (9), (12) and (13) above shall not apply to Explanation 1 to section 234A of the Act, in cases where the amount of tax on the total income as reduced by the amount as specified in clauses (i) to (vi) of sub-section (1) of that section exceeds one lakh
Clarification 2: For the purpose of Clarification 1, in case of an individual resident in India referred to in sub-section (2) of section 207 of the Act, the tax paid by him under section 140A of the Act within the due date (without extension under this Circular) provided in that Act, shall be deemed to be the advance tax”
Now, let’s understand what is explanation 1 to section 234A of the Income Tax Act:
“In this section, “due date” means the date specified in sub-section (1) of section 139 as applicable in the case of the assessee.”
Thus, explanation 1 to section 234A deals with due date wherein it says that due date for section 234A will have same meaning as mentioned in section 139(1) but for such extension this due date will not be extended if the total tax exceeds Rs. 1 lakh.
Hence, one should calculate it’s tax liability for FY 2020-21 or get consultation of an expert to calculate your tax liability.
As per the above provision the relevant extract of section 234A is as under:
“Where the return of income for any assessment year under sub-section (1) or sub-section (4) of section 139, or in response to a notice under sub-section (1) of section 142, is furnished after the due date, or is not furnished, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or part of a month comprised in the period commencing on the date immediately following the due date, and,—
(a) where the return is furnished after the due date, ending on the date of furnishing of the return; or
(b) where no return has been furnished, ending on the date of completion of the assessment under section 144,
on the amount of the tax on the total income as determined under sub-section (1) of section 143, and where a regular assessment is made, on the amount of the tax on the total income determined under regular assessment, as reduced by the amount of,—
(i) advance tax, if any, paid;
(ii) any tax deducted or collected at source;
(iia) any relief of tax allowed under section 89;
(iii) any relief of tax allowed under section 90 on account of tax paid in a country outside India;
(iv) any relief of tax allowed under section 90A on account of tax paid in a specified territory outside India referred to in that section;”
Thus, if you are an individual other than senior citizen who is not liable for any audit and his normal due date for filing return of income is 31.07.2021 and if your total tax payable after adjustment of advance tax, TDS/ TCS, relief under section 89, 90 and 90A is more than 1 lakh then interest at 1% shall be charged u/s 234A per month or part of month from 01.08.2021 till the date you file your Income Tax return.
In case of senior citizen, if one pays tax before 31.07.2021, same shall be considered as advance tax and will be allowed to be reduced from total tax payable for calculating amount u/s 234A and hence 234A interest shall be charged only on balance amount.
There are other relief as well u/s 234A which needs to be reduced from total tax payable, but for the purpose of the circular only the above 4 items shall be reduced from total tax payable.
Thus, it is advisable to pay interest and file Income tax return at the earliest so as to save yourself from 2% interest per month i.e. 1% u/s 234A and 1% u/s 234B of the income tax act (if advance tax was not paid).
Hence, it is very much important to pay advance tax in due time.
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