Loading...

⚠ ✕
❮ Top
☎ Help
☰
×

By creating an account you can:

Logo TaxTMI
Call Us / Help / Feedback✕

Contact Us At :

✉ E-mail: [email protected]

✆ To Call / Whatsapp, Check Contact Us

FAQs :

To know Frequently Asked Questions, Check FAQs

Most Asked Video Tutorials :

For more tutorials, Check Video Tutorials

Submit Feedback/Suggestion :

Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters 0/2000
Make Most of Text Search ✕
  1. Checkout this video tutorial: How to search effectively on TaxTMI.
  2. Put words in double quotes for exact word search, eg: "income tax"
  3. Avoid noise words such as : 'and, of, the, a'
  4. Sort by Relevance to get the most relevant document.
  5. Press Enter to add multiple terms/multiple phrases, and then click on Search to Search.
  6. Text Search
  7. The system will try to fetch results that contains ALL your words.
  8. Once you add keywords, you'll see a new 'Search In' filter that makes your results even more precise.
  9. Text Search
╳
Add to...
You have not created any category. Kindly create one to bookmark this item!
✕
Create New Category
Hide
Title :
Description :
❮❮ Hide
❮ Default View
Expand ❯❯
Close ✕
🔎 Filters / Advanced Search ❯
TEXT

Press 'Enter' to add multiple search terms. Rules for Better Search

Search In
Main Text + AI Text ❯
  • Main Text
  • Main Text + AI Text
  • AI Text
Law:
---- All Laws---- ❯
  • ---- All Laws----
  • Benami Property
  • Bill
  • Central Excise
  • Companies Law
  • Customs
  • DGFT
  • FEMA
  • GST
  • GST - States
  • IBC
  • Income Tax
  • Indian Laws
  • Money Laundering
  • SEBI
  • SEZ
  • Service Tax
  • VAT / Sales Tax
Types:
---- All Types ---- ❯
  • ---- All Types ----
  • Act Rules
  • Case Laws
  • Circulars
  • Manuals
  • News
  • Notifications
Sort By: ?
In Sort By 'Default', exact matches for text search are shown at the top, followed by the remaining results in their regular order.
Relevance Default Date
☰   Show Results ❯
    Concessional GST on Works Contracts for Co-operative Spinning Mills: Government Entity Status and Pr...
    Case Laws Customs
    Abetment and Knowing Use of False Import Documents under Sections 112(a) and 114AA
    Subcontracted Services on Own Account and the Intermediary Exclusion under Section 2(13)
    Case Laws Customs
    Classification of Two-Ton Ductless Split Air Conditioners under Tariff Item 8415 82 10
    Case Laws Income Tax
    Transfer Pricing of Pre-Conversion Interest on Compulsorily Convertible Debentures
    Case Laws Customs
    Clubbing of Contrived Split Consignments under Rule 2(a) and Valuation of a Dismantled Motorcycle
    GST on Corporate Guarantees: Substantive Liability, Deemed Valuation and Judicial Relief
    Case Laws Income Tax
    Employee Secondment under the India-USA DTAA: Employment Rights, Reimbursements and Included Service...
    Pre-deposit Under Section 112 and Independent Compliance with Tribunal Filing Fees
    Case Laws Income Tax
    TDS on Interest Paid by Co-operative Banks to Non-Member Co-operative Societies under Section 194A(3...
    Input Tax Credit and Supplier Non-Payment: Statutory Limits on Mechanical Reversal Under Section 16(...
    Case Laws Customs
    Appellate Jurisdiction over Goods Imported as Baggage under Sections 129A and 129DD of the Customs A...
    Monetary Limits for Departmental GST Appeals under Section 120 and Circular No. 207/1/2024-GST
    Alleged Re-use of E-Way Bills under Section 129: Evidentiary Burden in Detention Proceedings
    Turnover of Zero-Rated Supply Under Rule 89(4): Invoice Period and Subsequent Physical Export
    Case Laws Income Tax
    Reassessment Proceedings: Speaking Disposal of Objections Before Scrutiny Under Sections 143(2) and ...
    Suppression of Facts under Explanation 2 to Section 74 of the CGST Act in Cases of Ineligible Input ...
    Case Laws Customs
    Classification of Low-Ethoxylated Non-Ionic Fatty Alcohol Ethoxylates under Headings 3402 and 3824
    Case Laws Customs
    Seizure and Detention of Imported Cars under Sections 110, 110A and 124 of the Customs Act, 1962
    Case Laws Companies Law
    Lifting the Corporate Veil Where Promoter Shareholding Is Allegedly Dissipated Despite Judicial Assu...
❮
❯
❯❯
Maximize Maximize Maximize
0 / 200
Expand Note
Add to Folder

No Folders have been created

+

Are you sure you want to delete "My most important" ?

NOTE:

Notes
Showing Results for :
Reset Filters
Results Found:
Show All Summaries Hide All Summaries
Case Laws GST
Show AI Summary
Non-business construction concessions for spinning mills require eligible recipient status and predominantly non-industrial use of the constructed buildings.
For the disputed period, the works-contract concession required both an eligible governmental recipient and structures predominantly meant for use other than commerce, industry, business or profession. Government Entity status required evidence of the recipient's constitution and qualifying governmental participation, while procurement had to relate to entrusted work. Project funding, tender approval and supervision did not by themselves establish governmental constitution or control. The spinning-mill factory buildings and allied works were intended for yarn production and related commercial activities. The residual construction-services entry carried aggregate GST of 18% for services outside the specified concessional entries.
Case Laws Customs
Show AI Summary
Import document handling alone does not establish customs abetment or knowing use of materially false declarations.
Personal customs penalties depend on the person's own conduct, not merely on the confiscability of imported goods. Under Section 112(a) of the Customs Act, 1962, liability may arise from a person's own act or omission rendering goods liable to confiscation or from abetment of such conduct. The direct limb can operate on a strict-liability basis where a person's own act or omission renders goods confiscable; an allegation of abetment instead requires evidence of participation or culpable facilitation. Section 114AA requires knowing or intentional making, signing or use, or causing the making, signing or use, of a declaration, statement or document that is materially false or incorrect in customs business.
Case Laws GST
Show AI Summary
Subcontracted services performed on own account are not intermediary services merely because they support overseas recruitment and customer-facing activities.
Intermediary classification under Section 2(13) of the IGST Act distinguishes arranging or facilitating supplies between other persons from supplying services on one's own account. The intermediary framework requires at least three parties, a main supply and a distinct ancillary facilitating supply, with conduct resembling that of a broker or agent. Subcontracting the whole or part of a service is not intermediary activity merely because performance supports another supplier's business or involves its customers. Neither a bilateral agreement, contractual label nor remuneration method is conclusive.
Case Laws Customs
Show AI Summary
Split air conditioner classification requires capacity and refrigeration features to be assessed against the applicable tariff hierarchy.
Classification of ductless split air conditioners depends on the complete tariff description and the machine's technical characteristics. A complete, cooling-only, two-ton split air conditioner incorporating a refrigerating unit and lacking a heat-reversal valve falls within tariff item 8415 82 10 rather than the general split-system item 8415 10 10. Item 8415 82 10 inherits its parent subheading's refrigerating-unit requirement, while item 8415 83 10 requires the absence of such a unit. Capacity alone does not establish the applicable refrigeration-based entry. Technical evidence should establish whether the goods are a complete machine and identify their capacity and operating features.
Case Laws Income Tax
Show AI Summary
Convertible debenture interest requires evidence-based pricing before conversion; future equity conversion alone cannot establish a nil arm's length price.
Pre-conversion interest on compulsorily convertible debentures (CCDs) issued to a non-resident associated enterprise requires arm's length pricing. Compulsory future conversion and hybrid classification do not, by themselves, establish a nil price or extinguish an existing coupon obligation. Rule 10AB's Other Method requires a price charged, paid or expected in comparable uncontrolled circumstances, with reasonably accurate adjustments for material differences under Rule 10B. Currency, benchmark date, tenure, credit risk, security, non-redemption and conversion benefits affect comparability; a conventional bank lending rate is not automatically comparable to a long-tenor CCD.
Case Laws Customs
Show AI Summary
Split motorcycle consignments require evidence of deliberate fragmentation for composite classification, with valuation assessed independently of classification.
Clubbing of split consignments for customs classification depends on proof that apparently separate imports form one deliberately fragmented transaction, not merely on the possibility of assembly. Rule 2(a) extends a tariff heading to an incomplete article possessing the essential character of the complete article and also covers a complete article presented disassembled. A change of tariff heading alone does not establish that the transaction value is inaccurate; substantive misdescription of the goods requires separate evidentiary consideration. Replacement value must follow the prescribed sequence of methods.
Case Laws GST
Show AI Summary
Corporate guarantee taxation depends on distinguishing taxable supply from valuation, particularly for unpaid support between related businesses.
GST on corporate guarantees requires separate consideration of whether a taxable supply exists and how that supply is valued. Section 7(1)(c) and Schedule I encompass qualifying supplies between related or distinct persons without consideration when made in the course or furtherance of business. Rule 28(2) deems the value of a guarantee furnished to a banking company or financial institution for a related recipient in India to be one per cent of the guaranteed amount per annum or actual consideration, whichever is higher. Where the recipient is eligible for full input tax credit, the proviso treats the value declared in the invoice as the value of the supply.
Case Laws Income Tax
Show AI Summary
Employee secondment taxation depends on employment rights, service consideration and demonstrable transfer of technical capability to host entities.
Local operational control and a stated suspension of foreign employment do not, by themselves, resolve whether underlying foreign employment rights survive. Under Article 12(4)(b) of the India-USA DTAA, technical or consultancy services must make technical knowledge, experience, skill, know-how or processes available, or involve development and transfer of a technical plan or design. Under the knowledge-transfer limb, the recipient must acquire a capability it can use independently; the mere application of expertise or presence of qualified personnel is insufficient. Recovery at actual cost and absence of markup do not, by themselves, establish that a foreign enterprise's receipt is non-taxable.
Case Laws GST
Show AI Summary
GST appellate pre-deposits may be satisfied by verified earlier payments after demand reduction, but filing fees remain independently payable.
When the first appellate authority substantially reduces the disputed tax demand, an earlier deposit may be sufficient to satisfy the Tribunal-stage requirement, subject to verification. Sufficiency depends on the reduced liability, the applicable appellate requirements and the amount actually deposited; a first appellate payment does not automatically eliminate the additional obligation. Tribunal filing fees under Section 112(7) operate independently of pre-deposit. Where a fee shortfall and earlier deposit require verification, proof of fee payment and verification of the deposit precede consideration of admission.
Case Laws Income Tax
Show AI Summary
Inter-co-operative society interest exemption preserves non-deduction by co-operative banks when depositors are co-operative societies under the statutory withholding framework.
Section 194A(3)(v) separately addresses interest paid by a co-operative bank to a member and interest paid by a co-operative society to another co-operative society. The exclusion of co-operative banks is confined to the member-payment limb; a co-operative bank remains a co-operative society for the inter-co-operative society limb. Paragraph 42.7 of Circular No. 19/2015 preserves non-deduction, including time-deposit interest, where the depositor is a co-operative society. Section 80P does not determine this withholding obligation.
Case Laws GST
Show AI Summary
Input tax credit reversal requires evidence linking supplier non-payment to recipient ineligibility and a reasoned statutory inquiry.
Input tax credit under Section 16(2)(c) remains conditional on actual payment of tax to Government, but supplier non-payment or retrospective cancellation cannot by itself justify reversal. The recipient must establish eligibility through transactional evidence, while the proper officer must investigate the particular supply, disclose supplier-default and recovery material, apply the law applicable to the relevant period, and issue a reasoned, notice-bound determination. Supplier recovery status and protection against duplicate collection are material considerations.
Case Laws Customs
Show AI Summary
Baggage-related customs appeals proceed through statutory revision when the jurisdictional exclusion applies to passenger imports.
The first proviso to section 129A(1) excludes Appellate Tribunal jurisdiction over an order under section 128A relating to goods imported or exported as baggage. The decisive issue is the order's connection with baggage, not disputes concerning confiscation, declaration, duty, personal effects, concealment, concession, or penalty. Articles carried by an international passenger in luggage or on the person may constitute baggage. Section 129DD provides revision before the Central Government, ordinarily within three months, subject to a further period on sufficient cause.
Case Laws GST
Show AI Summary
Departmental GST appeal monetary limits regulate officers, while composite orders and proven recurring issues may permit appeals.
Sections 120 and 168 of the Central Goods and Services Tax Act, 2017 make monetary-limit directions binding within the Central tax hierarchy, while they regulate the executive decision to file rather than create an inflexible jurisdictional bar before the Tribunal. In a composite order disposing of multiple appeals or demand notices, the relevant amount is the total disputed tax, interest, penalty or late fee, as applicable. The recurring or interpretative-issue exclusion requires a reasoned, case-specific basis, and Commissioner authorisation does not itself establish compliance with the litigation policy.
Case Laws GST
Show AI Summary
E-way bill re-use allegations require corroborated proof identifying the same goods; vehicle movement alone cannot establish contravention.
Alleged re-use of invoices and e-way bills requires the seizing authority to establish through positive, corroborated evidence that the intercepted goods are the same consignment previously transported under those documents. Toll data, vehicle movements and photographs may justify inquiry but do not alone prove prior delivery, identity of goods or re-use. Where invoices and e-way bills accompany the goods and physical verification shows no discrepancy, the authority must investigate and address any explanation of a different earlier consignment. Cases involving absent or expired transport documents remain factually distinct.
Case Laws GST
Show AI Summary
Zero-rated supply turnover includes export invoices from the refund period when actual export is subsequently established under bond or LUT.
Under Rule 89(4), invoice values for goods invoiced before or at removal for export under bond or Letter of Undertaking may be included in zero-rated turnover for the relevant refund period, although physical export occurs later. The invoice and removal determine period-wise attribution for the refund formula, while actual export remains essential to sustain the claim. Shipping bills, bills of export and related export records must correlate with the export invoices to establish that the goods were ultimately exported. Compliance with valuation, input tax credit eligibility and bond or Letter of Undertaking conditions remains necessary.
Case Laws Income Tax
Show AI Summary
Reassessment objections require speaking disposal and a four-week pause before scrutiny or information requests can begin.
Under the pre-amendment Section 148 framework, reassessment jurisdiction must be resolved before merits-stage scrutiny begins. The Assessing Officer must furnish recorded reasons when requested, permit objections, and decide them through a separate speaking order. A Section 143(2) notice commences scrutiny, while a Section 142(1) notice is a substantive inquiry step; neither may issue before objections are decided. Following rejection, a four-week period from service of the speaking order must be allowed before further reassessment action, preserving an effective opportunity to challenge reopening.
Case Laws GST
Show AI Summary
Suppression of facts requires proof of deliberate tax evasion; ineligible input tax credit alone cannot support enhanced proceedings.
Section 74 permits enhanced tax determination for wrongly availed or utilised input tax credit only where fraud, wilful misstatement, or suppression of facts to evade tax is established. Wrong or ineligible credit is distinct from substantive credit eligibility and cannot, without evidence of deliberate conduct and intent, amount to suppression. Under historical Explanation 2, suppression required either omitted information legally required in prescribed filings or failure to provide information sought in writing; both operate subject to the statutory evasion requirement. Disclosed reconciliations and portal records materially weaken a bare allegation of non-declaration.
Case Laws Customs
Show AI Summary
Organic surface-active agent classification requires water solubility and stability; phase-separating low-ethoxylated products fall outside Heading 3402.
Classification of low-ethoxylated non-ionic fatty alcohol ethoxylates under Heading 3402 requires satisfaction of the cumulative water test in Chapter Note 3. At the prescribed concentration, temperature, and standing period, the product must both remain a transparent or translucent liquid, or stable emulsion, without phase separation and reduce water surface tension to the stated threshold. Non-ionic character or surface activity alone is insufficient. Where a low-ethoxylated product separates into layers and fails the solubility and stability requirement, Heading 3824 may be considered after exclusion from Heading 3402.
Case Laws Customs
Show AI Summary
Lawful customs seizure requires recorded confiscation grounds, formal restraint where needed, and timely notice; detention cannot bypass safeguards.
Customs seizure of an imported car requires recorded reason to believe that it is liable to confiscation. A panchnama restraint cannot replace a lawful seizure order, an undertaking where seized goods remain in custody, or a served non-dealing order where seizure is impracticable. Section 110(2) requires prompt notice under Section 124, subject only to the prescribed extension mechanism. Prolonged effective detention cannot postpone those safeguards. Provisional release under Section 110A applies only to goods lawfully seized and cannot validate an earlier detention without statutory authority.
Case Laws Companies Law
Show AI Summary
Corporate veil-piercing permits forensic scrutiny in execution where promoter-controlled entities may dissipate shareholding despite judicial assurances.
Corporate veil-piercing in execution is an exceptional response where promoters allegedly use layered entities and securities transactions to deplete shareholding represented as security through judicial assurances. Separate personality remains the rule, and control or ownership alone does not suffice; there must be a nexus between control, misuse of the corporate form, and frustration of enforcement. A forensic audit reconstructs share movements, pledges, sales, financing, approvals, disclosures, and fund flows, distinguishing legitimate enforcement of pre-existing security from coordinated asset dissipation.

TMI Notes

Back

All TMI Notes

Showing Results for :
Reset Filters
No Records Found

TMI Notes

Comparison of section 423 "Interest for defaults in furnishing return of income." between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

15 September, 2025

Contents
Acts
Rules & Regulations
Summary
Note

Note

-

Bookmark

(New) -

Download

Print

Print

Section 423 Interest for defaults in furnishing return of income.

Income-tax Act, 2025

At a Glance

Document compared: Section 423 of the Income-tax Act, 2025 (as appearing in the enacted Act) and Clause 423 of the Income Tax Bill, 2025 (Old Version) (the Bill text supplied). Both texts deal with interest for defaults in furnishing return of income. The provisions affect taxpayers required to furnish returns, and the income-tax department in calculating and demanding interest. Effective date or decision date: Not stated in the document.

Background & Scope

Statutory hook: Clause 423 in the Income Tax Bill, 2025 - Old Version (hereinafter "Clause 423 (Bill)"). Subject matter: interest chargeable for defaults in furnishing return of income. Coverage: outlines when simple interest at the rate implicit in the formula I = 1% x A x T becomes payable, defines the starting and ending dates for computation across specified circumstances, prescribes treatment where post-assessment orders alter tax, and defines components included in "tax paid". Definitions or explanations provided in the text: limited to the formula and the Table; the Bill supplies a definition of "tax paid" in sub-section (4)(d) with enumerated items (i)-(vii). No separate definitions section is provided.

Statutory Provision Mode

Text & Scope

Clause 423 imposes simple interest for defaults in furnishing a return of income. The interest is computed by the formula I = 1% x A x T, where A is the "amount of tax on which interest is payable" (as specified in sub-section (2)) and T is the number of months comprised in the period commencing on the day after the "starting date" and ending on the "ending date" specified in the Table. Sub-section (2) contains a Table that maps specific circumstances to starting date, ending date and the tax base (A) for interest computation. The Table covers four scenarios: (1) return furnished u/s 263(1), (4) or (6) or in response to a notice u/s 268(1) after the due date; (2) no return furnished under the said sections; (3) return required by a notice under an unspecified section issued after certain determinations and furnished late; and (4) where such a notice requires a return and no return is furnished. Sub-section (3) deals with the consequence of orders (under a list of sections) that increase or reduce the tax base for interest, prescribing issuance of notice of demand in prescribed form where interest increases, and refund of excess interest where interest is reduced. Sub-section (4) contains qualifying notes, including exclusions of additional income-tax u/s 267 from the tax bases, reduction of interest payable by amounts of interest paid u/s 266, and the detailed meaning of "tax paid". Sub-section (5) treats an assessment made for the first time u/s 279 as a "regular assessment" for purposes of the section.

Interpretation

Legislative intent as indicated by the Bill text: to provide a simple, uniform interest formula for late or non-furnishing of returns and to tie the interest computation periods to concrete events (due date, date of furnishing, date of completion of assessment, dates specified in notices). The Table-driven approach indicates an intent to vary the tax base (A) and the start/end dates according to factual circumstances of how and when returns are filed or not filed. The inclusion of a detailed "tax paid" definition shows an intent to net off various prepayments and credits from the tax base when computing interest. The provision for adjustment upon post-assessment orders (sub-section (3)) manifests an intent to align interest levies with the final assessed tax position.

Exceptions/Provisos

Carve-outs or qualifications present in the Bill include:

  • Exclusion of additional income-tax u/s 267 from the tax base (4)(a)-(b).
  • Reduction of interest payable by interest already paid u/s 266 (4)(c).
  • Specific items constituting "tax paid" (4)(d)(i)-(vii), which serve as offsets against the tax base for interest calculation.
  • Where an assessment is made for the first time u/s 279, it is to be regarded as a regular assessment (5).

Illustrations

  • Example 1: A return filed late in response to a notice u/s 268(1). Starting date is the due date u/s 263(1); ending date is date of furnishing; A is tax on total income as determined u/s 270(1) (if regular assessment not made) or tax determined under regular assessment, reduced by "tax paid". (All other specifics of amounts and dates Not stated in the document.)
  • Example 2: No return furnished in response to a notice u/s 268(1). Starting date is due date u/s 263(1); ending date is date of completion of assessment u/s 271; A is tax on total income determined under regular assessment reduced by "tax paid". (Concrete amounts and computation Not stated in the document.)
  • Example 3: Return required by a notice (serial number 3) but furnished after expiry of time allowed under such notice. Starting date is the date immediately following the last date of time allowed under such notice (Bill text); ending date is date of furnishing; A is amount by which reassessed tax exceeds earlier tax. (The Bill text contains an omission in the cross-reference to the notice section; specifics Not stated in the document.)

Interplay

The Bill text expressly references multiple other provisions (sections 263, 268, 270, 271, 279, 280, 266, 267, 287, 288, 289, 359, 363, 365(10), 368, 377, 378, 206). Interplay with those provisions is central to determining starting/ending dates, the tax base (A), and credits. The Bill, as supplied, contains at least one omitted cross-reference (a missing section number in the Table at serial number 3) and a differing cross-reference for the tax credit clause (206(13) vs the multi-paragraph references in the Act). These differences create potential interpretive issues and could require reconciliation with the substantive provisions of the referenced sections; however, the content of those referenced sections is Not stated in the document.

Differences between the two provisions and practical impact

  • Starting date for notice-required returns (serial numbers 3 and 4): The enacted Section 423 (Act) uses "The last date of time allowed under such notice" as the starting date for serial numbers 3 and 4. The Clause 423 of Bill (Old Version) uses "Date immediately following the last date of time allowed under such notice" (for both serial numbers 3 and 4 in the Bill).
    • Practical impact: shifting the stated starting date by one day will change the counted months (T) in the formula I = 1% x A x T in some cases; whether the difference produces a material change depends on the method of counting months under the section (not further specified in the documents). It can lead to one additional month being counted in some interpretations, thereby increasing interest liability slightly in some cases.
  • Row 3 starting date wording: In the Act text, for serial number 3 the Starting date is "The last date of time allowed under such notice." The Bill text, for serial number 3, states "Date immediately following the last date of time allowed under such notice."
    • Practical impact: same as above; potential to alter the period used for interest computation.
  • Omissions/typographical differences affecting clarity: The Bill's Table entry for serial number 3 contains an apparent omission - "Where return of income is required by a notice u/s issued after..." (the section number is missing). The Act provides the relevant contextual references (Act shows section 280 in related contexts).
  • Practical impact: omission creates ambiguity in the Bill text about which notice provision is referred to; this could cause interpretive uncertainty unless corrected. The Act text does not exhibit that omission in the supplied extract.
  • "Tax paid" definition - tax credit cross-references: The Act's clause (4)(d)(vii) defines "tax paid" to include "any tax credit allowed to be set off as per sections 206(1)(m) to (p) and 206(2)(e) to (h)." The Bill (Old Version) substitutes "(vii) any tax credit allowed to be set off as per section 206(13)."
    • Practical impact: this is a substantive difference in cross-references. If the Bill's singular reference is intended to capture the same set of credits, the drafting does not make that clear. Depending on the actual content of section 206 in the statute (not stated in the document), taxpayers may lose (or gain) certain credits being treated as "tax paid" for interest computation. As the document supplied does not state the content of section 206, the practical effect cannot be fully determined from the text alone.
  • Form of notice of demand: Sub-section (3)(a) in the Act reads "in such form as may be prescribed"; the Bill reads "in the form as prescribed."
    • Practical impact: stylistic/minor drafting difference; both phrases point to prescribed form, but "such form as may be prescribed" is the more conventional legislative formulation. No clear substantive impact in isolation.
  • Other structural/wording differences: Minor variations in punctuation, paragraphing and referential phrases occur across the two texts (for example, use of "the Assessing Officer shall serve on the assessee a notice of demand in such form as may be prescribed specifying the sum payable" vs "shall serve on the assessee a notice of demand in the form as prescribed specifying the sum payable").
    • Practical impact: primarily drafting and clarity; no express substantive change beyond the items noted above based on the supplied texts.

Practical Implications

  • Compliance and risk areas: The precise starting date language (whether the last date of time allowed or the day after that date) will affect calculation of months (T) - which could increase or decrease interest by the formula provided. Taxpayers filing in response to notices should be alert to how the start date is to be computed. Where the Bill's cross-references differ (notably to section 206), taxpayers should verify which tax credits count as "tax paid" for interest computations - the Bill text introduces uncertainty. The omission of a section number in serial number 3 may create avoidable disputes until corrected.
  • Record-keeping/evidence points: The text makes clear that dates of notices, dates of furnishing of returns, dates of completion of assessments and amounts of tax determined at various stages are determinative items. Parties should maintain contemporaneous records showing notice dates, time allowed under notices, dates of filing, assessments and any payments or credits claimed (details of records to be kept Not stated in the document).

Key Takeaways

  • Clause 423 (Bill) applies a simple interest formula I = 1% x A x T for defaults in furnishing returns, tying the interest period to specific starting and ending events listed in a Table.
  • There are material drafting differences between the Bill and the enacted Section 423: notably in the exact stated starting dates for notice-driven cases and in the cross-references used to define tax credits included as "tax paid".
  • Shifts in starting date wording (last date vs date immediately following) can alter interest months counted and thus interest liability; the Bill language tends to state the day after, potentially increasing periods in some views.
  • The Bill text contains an omission (missing section reference in serial number 3 of the Table) creating interpretive ambiguity that requires correction or legislative clarification.
  • The Bill lists prescribed mechanisms for adjustment where post-assessment orders alter tax and requires notice of demand or refund accordingly.
  • The provision for reduction of interest by interest already paid u/s 266 and the detailed enumeration of items constituting "tax paid" show an intent to prevent double charging and to net prepayments and credits.

Full Text:

Section 423 Interest for defaults in furnishing return of income.

Topics

Acts Income Tax