Waiver & Interest on Excess Payment of Advance Tax

As we are liable to pay interest u/s 234A, 234B and 234C for late payment or non payment of advance tax.

In the similar manner the Government is also liable to pay interest if we pay advance tax more than due. But there is huge difference of interest rate in the case of Government liability.

Interest on Excess Payment of Advance Tax: According to Sec 244A, where the advance tax pay is more than tax due/assessed, the government is liable to refund excess tax deposit. The Government will pay interest @ 0.5% for every month if the excess is more than 10% of the tax assessed from the first day of the assessment year to the date of grant of refund.

Waiver of Interest: The Central Board of Direct Taxes (CBDT) has authority to relief the provision of sections 234A, 234B and 234C in some cases.

The Chief Commissioners and Directors General (investigation) has power to waive penal interest in the following cases.

  • Where the books of account have been impounded in a search operation and the assessee is not able to prepare his return of income.
  • Where the cash had been seized in a search and was not permitted to be adjusted against tax payment.
  • Where any income other than ‘capital gains’ was received or accrued unexpectedly, after the date of any advance tax instalment.
  • Where as a result of any retrospective amendment of law or decison of the Supreme Court, certain receipts which were hitherto related as exempt, become taxable.
  • Where return of income is filed voluntarily without detection by the income-tax Department, and the return could not be file or advance tax could not be paid by the stipulated date due circumstances beyond the control of the assessee.

As it is clear from the above conditions that CBDT has given power to officers to reduce or waive off penal interest. And you can also get interest from Government if you mistakenly deposit more advance tax than due payment. You should check advance tax calculation properly before deposit any advance tax instalment. The following articles will help you to calculate advance tax on your income and interest of late or nonpayment of advance tax.

Useful Articles on Advance Tax

How to Deposit Advance Tax?

Advance Tax Due Dates

Income Tax Slabs / Advance Tax Rates

Who is Liable to Pay Advance Tax?

Interest on Short Payment Non Payment of Advance Tax

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