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ITR filing date extended: Will you end up paying more as penal interest? Explained with calculation
May, 29th 2020

Income Tax Return (ITR) Filing Date 2020: The Central government recently extended the due date for filing income tax returns for 2019-20 till November 30, 2020.

Income Tax Return (ITR) Filing Date 2020: The Central government recently extended the due date for filing income tax returns for 2019-20 till November 30, 2020. While announcing the extension, Finance Minister Nirmala Sitharaman had said that it would ease the compliance burden for taxpayers. The extension in ITR filing date has certainly come as a relief to many taxpayers amid Coronavirus scare. However, there is a fear in some section of taxpayers who think that delay in income tax filing will only lead to paying further penal interest on income dues. Some also wonder as to whether the ITR filing extension will be significant for someone who is not paying advance tax or is in higher tax brackets? FE Online talked to Archit Gupta, Founder and CEO, ClearTax, to find out answers to these queries. Following are his observations:

Gupta said there are two obligations of a taxpayer. First, to calculate estimated tax liability for an ongoing financial year and pay advance tax. Second, to calculate the actual income-tax liability and pay the balance tax payable.


“The liability to pay advance tax arises when tax liability after reducing TDS, TCS and other tax credits is Rs 10,000 or more. Only senior citizens (60 years and above of age) who do not run a business are exempt from paying advance tax,” he said.

For FY 2019-20, a taxpayer has to estimate tax payable and pay advance tax in four instalments namely 15 June, 15 September, 15 December and 15 March. Any deferment in paying the advance tax instalments results in interest liability under section 234C.

Additionally, the taxpayer should pay:

  1. 100% of the income-tax liability by 31 March where the advance tax is not paid during the year.
  2. At least 90% of the assessed tax as advance tax.

In case of default in payment of above, the taxpayer is liable to pay interest under section 234B on the balance tax liability due while filing the income tax return.

For example, for the FY 2019-20, the total tax liability of Mr X is Rs 1,50,000. A TDS of Rs 1,20,000 is already deducted on his salary. Mr X paid Rs 10,000 on 15 March 2020 as advance tax. His interest calculation is as under:

  • 0.75% p.m. under section 234B on the balance tax liability of Rs 20,000 from 1 April 2020 to 30 June 2020. The interest liability continues till the date of final payment of tax on or before filing the tax return. Hence, if your tax liability remains unpaid as on 30 June 2020, you are liable to further interest at 1% p.m. from 1 July 2020 till the date of payment of tax.
  • 1% p.m. under section 234C on the deferment in payment of various instalments of advance tax during the FY 2019-20.

The interest liability under section 234B arises since the tax already paid by way of TDS and advance tax (Rs 1,20,000 plus Rs 10,000) Rs 1,30,000 is less than 90% of the total tax liability of Rs 1,50,000.

The interest liability under section 234C remains unaffected by the postponement of the filing of the tax return. However, the interest under section 234B increases with a delay in filing of the return. It is advisable to pay any outstanding tax immediately to help avoid further penal interest accumulation.

As the penal interests are not waived off or mentioned, is it advisable to pay Income Tax immediately and not wait till the last date?

Replying to this question, Gupta said that you can calculate your total income for the FY 2019-20 and the total tax liability. You can take credit for TDS on various incomes such as salaries and bank FD interest and also reduce any advance tax paid during the FY 2019-20. It is advisable to pay the balance tax liability at the earliest to avoid further interest payments under section 234B.

You may need to wait for the TDS details for the last quarter of FY 2019-20 or your Form 16 or other TDS certificates. Upon having the same, you should proceed to calculate and pay the balance tax, if any. This helps you avoid further interest liabilities.

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