Penal Interest On Late Payment Of Taxes

Query) I am an employee of a PSU, and my income comprises salary and interest on FDs. While the tax on my salary is deducted at source as per applicable rates, the tax on interest income is deducted at source at the rate of 10 per cent. Since I come under the 30 per cent slab, I deposited the remaining 20 per cent tax on my interest income of Rs 1.40 lakh earned during the FY13 (1-4-2012 to 31-3-2013). The tax was deposited on July 25, 2013 under Self Assessment Tax and the tax return on Form ITR-2 was e-filed on July 26, 2013. Please advise me on the following points: 

1. Am I liable to pay penal interest on the tax deposited on July 25, 2013? If yes, then from what date and at what rate?
2. Where should I show this amount of penal interest in my ITR 2 return, as there is no column to report interest on Self Assessment Tax?

- Kishore Kumar Jaswani, New Delhi

1. Under Section 207 of the Income Tax Act, 1961, it is obligatory for an assessee to pay advance tax during the financial year at the prescribed intervals, where the estimated tax liability for the previous year is greater than Rs 10000.

However, it may be noted that with effect from April 1, 2012, this provision is not applicable to an assessee being an individual resident in India, who is a senior citizen and not having any income chargeable under the head ‘Profit and gains of business or profession’ at any time during the previous year.

You have filed the return of income before the due date as mentioned u/s.139 (1) of the Income Tax Act, 1961. However, you have not mentioned whether your income tax liability in respect of your income for the said previous year was more than Rs 10000. If that is the case, you will be required to pay penal interest u/s. 234-B and 234-C of the said Act, as under:

Interest u/s. 234-B: In case of a failure to pay advance tax or where the actual advance tax paid is less than 90 per cent of the assessed tax, the assessee is required to pay interest at the rate of one per cent for every month or part thereof from the 1st day of the assessment year till the date of actual payment or the date of filing the return of income, as the case may be.

Interest u/s. 234-C: In case of deferment or shortfall in payment of advance tax in time [viz. in case of non-corporate assesses], the specified dates are as under:

1^stInstalment: September 15
2^ndInstalment: December 15
3^rdInstalment: March 15

Any amount paid on or before March 31 will be deemed to be payment as advance tax

The interest is payable at the rate of one per cent of the amount short paid or not paid, for a period of three months in respect of delayed or non-payment of first and the second instalments of advance tax each and at the rate of one per cent for a period of one month in respect of delayed or non-payment of the third/final instalment of advance tax.

2. There are columns to show penal interest paid u/s. 234-A, 234-B and 234-C in every form of return of income including ITR-2.