45. X estimated his income for FY. 2011-12 and calculated tax at Rs.25,000 for the purpose of advance tax. He has paid for the 1S installment in time i.e… before 15th September 2011. He has failed to pay the balance of two installments i.e. before 15th March 2012. He paid the balance by way of self-assessment tax and filed the return on 15′ December 2012. Calculate the interest in default of two advance tax installments and for late filing of returns.

1. Facts of the Case

• Mr. X estimated his income for the Financial Year (FY) 2011–12 and calculated advance tax liability of ₹25,000.
• He paid only the first installment of advance tax on time (before 15th September 2011).
• He failed to pay the remaining two installments due on 15th December 2011 and 15th March 2012.
• Instead, he paid the balance tax as self-assessment tax and filed the return on 15th December 2012, which is after the due date (normally 31st July 2012 for individuals).

2. Issues in the Case [Questions]

1. What is the interest liability under Section 234C for default in payment of advance tax installments?
2. What is the interest liability under Section 234B for shortfall in total advance tax payment?
3. What is the interest liability under Section 234A for late filing of return?

3. Legal Principles Covered

A. Section 234C – Interest for deferment of advance tax

• Interest is payable if advance tax is not paid as per the due dates.
• For individuals, due dates and percentages are:
  • 15th Sep – 30%
  • 15th Dec – 60%
  • 15th Mar – 100%
• X paid only the first installment; defaulted on December and March.
• Interest is 1% per month of the shortfall for 3 months (Sep-Dec and Dec-Mar).

B. Section 234B – Interest for shortfall in total advance tax

• Applies when advance tax paid is less than 90% of total tax liability.
• X paid only ₹7,500 (first installment) before 31st March.
• Since ₹7,500 < 90% of ₹25,000, Section 234B is applicable.
• Interest @ 1% per month from 1st April 2012 to 15th December 2012 (9 months) on unpaid amount.

C. Section 234A – Interest for late filing of return

• Applies if return is not filed within due date (31st July 2012).
• Filed on 15th December 2012 = delay of 4.5 months, rounded to 5 months.
• Interest @ 1% per month on total tax payable minus TDS/advance tax paid.

4. Possible Judgement (With Calculation)

Particulars	Amount (₹)	Interest Rate	Period	Interest Amount (₹)
Tax Liability (Self-assessed)	₹25,000
Advance Tax Paid (Sep 2011)	₹7,500
Balance Paid (Dec 2012)	₹17,500

A. Section 234C – Interest for deferment

• Dec Installment Shortfall = 60% of ₹25,000 = ₹15,000 − ₹7,500 = ₹7,500
  Interest: ₹7,500 × 1% × 3 = ₹225
• Mar Installment Shortfall = 100% − ₹7,500 = ₹17,500
  Interest: ₹17,500 × 1% × 1 = ₹175
  Total 234C = ₹225 + ₹175 = ₹400

B. Section 234B – Shortfall in total advance tax

• Shortfall = ₹25,000 − ₹7,500 = ₹17,500
• Period = 1st Apr 2012 to 15th Dec 2012 = 9 months
  Interest: ₹17,500 × 1% × 9 = ₹1,575

C. Section 234A – Late filing of return

• Filed on 15th Dec 2012 vs due date 31st Jul 2012 = 5 months delay
• Tax unpaid at due date = ₹25,000 − ₹7,500 = ₹17,500
  Interest: ₹17,500 × 1% × 5 = ₹875

Summary of Interest Payable

Section	Interest (₹)
234C	₹400
234B	₹1,575
234A	₹875
Total	₹2,850