Recently CBDT had made an early announcement via a circular of extension of due date under Income Tax Act for AY 2021-22 wherein various due dates relating to Income tax return, TDS and Tax audit were extended.
If we look at that circular we come to know that CBDT has extended due date for TDS return and Income tax return but no extension has been provided for payment of TDS or no relaxation in interest for delayed payment.
Hence, although there was extension in due date for filing TDS return for 4th quarter but no extension or relaxation was provided for payment of TDS.
Similarly no extension of due date for payment of self assessment tax or advance tax has been provided for income tax and neither there is any relaxation in rate of interest. A relaxation which was announced in the circular is as under:
“It is clarified that the extension of the dates as referred to in clauses (ix), (xii) and (xiii) 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 rupees one lakh.
Further, 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 ) provided in that Act, shall be deemed to be the advance tax.”
There are two types of relaxation in this but for that let’s first under interest u/s 234A which 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 such interest shall be applicable on total tax payable as reduced by:
“(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;
(v) any deduction, from the Indian income-tax payable, allowed under section 91, on account of tax paid in a country outside India; and
(vi) any tax credit allowed to be set off in accordance with the provisions of section 115JAA or section 115JD.“
Now, if you look at the above section 234A it does not take into consideration self assessment tax paid u/s 140A and hence the interest shall be chargeable on such self assessment tax as well.
Let’s have a look at the relaxation in the circular now:
1. Due date extension of return of income will not be applicable on due date for interest u/s 234A where tax payable for section 234A exceeds Rs. 1 lakh. Hence, if one does not pay total tax till 31st July or 31st October or 30th November as is applicable and tax payable amount is above Rs. 1 lakh then interest @1% per month shall be charged u/s 234A.
2. If a senior citizen who does not have income from business or profession and since he will not be liable to pay advance tax u/s 207, if he pays any amount as self assessment tax for AY 2021-22 as per normal due dates as mentioned above and as applicable in his case then in that case such self assessment tax shall be considered as advance tax for the purpose of section 234A, as under section 234A advance tax can be reduced from total tax and not self assessment tax.
Thus, any tax payment by such senior citizen before the original due date will be considered as advance tax and interest shall be calculated accordingly.
Hence, if we look at the relaxation there is not much relaxation for tax payment and relaxation is only provided for filing of return of income and government wants to collect it’s tax on the right time.
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