Section 234A - Interest for defaults in furnishing return of income

Section 234A imposes one percent monthly interest on late income tax return filing from due date until submission

Section 234A of the Income Tax Act, 1961 imposes simple interest at one percent per month on taxpayers who file their income tax returns after the due date or fail to file returns entirely. The interest is calculated on the tax liability as determined under assessment, reduced by advance tax paid, tax deducted at source, and various reliefs allowed under different sections. The interest period runs from the day after the due date until the return is filed or assessment is completed. For reassessment cases under notices issued after initial assessment completion, interest applies on the excess tax determined compared to earlier assessments. The provision allows for adjustment of interest when tax liability changes due to appellate orders or rectifications, with refunds provided for excess interest paid. This section applies to assessment years beginning April 1, 1989 onwards.