Just a moment...

Top
Help
×

By creating an account you can:

Logo TaxTMI
Call Us / Help / Feedback

Contact Us At :

E-mail: [email protected]

Call / WhatsApp at: +91 99117 96707

For more information, 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 ✕
🔎 TMI Notes - Adv. Search
TEXT SEARCH:

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
    Circulars Central Excise
    Authority to inspect the prosecution work and performance? FOR EVASION OF SERVICE TAX OR CENTRAL EXC...
    Circulars Central Excise
    Whether prosecution once launched can be compound ? FOR EVASION OF SERVICE TAX OR CENTRAL EXCISE :
    Circulars Central Excise
    What is the impact of prosecution under this Circular No. 1009/16/2015-CX - Dated: 23-10-2015 - Cent...
    Circulars Central Excise
    Can withdrawal of sanction order of prosecution is possible. If yes, then what the procedure men...
    Circulars Central Excise
    What is the term of publication of name of person convicted as per this Circular No. 1009/16/2015-CX...
    Circulars Central Excise
    Who will be responsible to monitor cases of prosecution as per this reasons include and how? FOR EVA...
    Circulars Central Excise
    what is the procedure of prosecution? FOR EVASION OF SERVICE TAX OR CENTRAL EXCISE :
    Circulars Central Excise
    Who has authority to sanction prosecution ? FOR EVASION OF SERVICE TAX OR CENTRAL EXCISE :
    Circulars Central Excise
    What is the meaning of term “Habitual Evaders” in terms of prosecution? FOR EVASION OF SERVICE T...
    Circulars Central Excise
    What is the prescribed limit for prosecution proceeding ? FOR EVASION OF SERVICE TAX OR CENTRAL EXCI...
    Circulars Central Excise
    The person who are liable to prosecuted ?-FOR EVASION OF SERVICE TAX OR CENTRAL EXCISE
    Circulars Service Tax
    Whether SBC is levied on all or selected services?
    Circulars Service Tax
    Does a person providing both exempted and taxable service and reversing credit @ 7% of value of exem...
    Circulars Service Tax
    How would liability be determined in case of reverse charge services where services have been receiv...
    Circulars Service Tax
    Whether SBC would be applicable on services covered by Rule 6 of Service Tax Rules (i.e. air travel ...
    Circulars Service Tax
    How would the service tax and Swachh Bharat Cess (SBC) be calculated on restaurant services covered ...
    Circulars Service Tax
    How would the tax (Service Tax and SBC) be calculated on services covered under Rule 2A, 2B or 2C of...
    Circulars Service Tax
    What would be the point of taxation for Swachh Bharat Cess?
    Circulars Service Tax
    Whether Cenvat Credit of the SBC is available?
    Circulars Service Tax
    How will SBC be calculated for services where abatement is allowed?
❯❯
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
Circulars Central Excise
Show AI Summary
Inspection of prosecution work: ensure compliance with prosecution guidelines and address pendency and non-compliance in tax enforcement.
Inspection of prosecution work requires the Director General, Directorate of Performance Management and Chief Commissioners to inspect Commissionerates to verify scrupulous compliance with the Circular's guidelines for launching prosecution. Inspections must examine reasons for pendency and non-compliance in prosecution cases and ensure recording of statistical data during field visits to support oversight of prosecution performance.
Circulars Central Excise
Show AI Summary
Compounding of offences: administrative authorities may permit settlement by payment and written offer when prosecution is initiated.
Compounding of offences for evasion under central excise and service tax allows the Principal Chief/Chief Commissioner to compound offences on payment of the compounding amount; Section 9A(2) of the Central Excise Act as applied to service tax via section 83 of the Finance Act authorises this, and circulars require that persons against whom prosecution is initiated or contemplated be informed in writing of the offer to compound.
Circulars Central Excise
Show AI Summary
Prosecution guidelines: sanctions granted after the circular govern cases regardless of offence date, with sanctioned cases reviewed.
Prosecution guidelines apply to all cases where sanction for prosecution is accorded after the circular's issue date, and such cases must be prosecuted according to the circular regardless of the offence date. Sanctioning authorities must review cases in which prosecution has been sanctioned but no complaint filed, reassessing them against the circular's provisions before any complaint is presented.
Circulars Central Excise
Show AI Summary
Withdrawal of prosecution permitted after final exoneration in parallel quasi judicial proceedings; formal application required to seek withdrawal.
Withdrawal of prosecution is permitted where identical allegations led to the noticee's exoneration in quasi judicial proceedings and that order is final; the senior tax or investigative leadership shall direct the commissionerate to file an application through the public prosecutor requesting judicial permission to withdraw the complaint in accordance with law and prosecution guidelines.
Circulars Central Excise
Show AI Summary
Publication of convicted persons' names may be sought by the department through courts under central excise and service tax law.
Power exists under the Central Excise statutory framework, as applied to service tax by the Finance Act, to publish the name and place of business of persons convicted under the relevant enactments; courts have exercised this power sparingly, and the department is directed to request courts to invoke this publication power in deserving cases for all convicted persons.
Circulars Central Excise
Show AI Summary
Prosecution monitoring: Principal Commissioners must track and review cases monthly to ensure satisfactory progress.
The Principal Commissioner/Commissioner must monitor prosecution files monthly, take corrective action where necessary, and inspect the prosecution register in the Prosecution Cell at least once every quarter. Designated supervisors in zonal investigative units must oversee prosecution work. Prosecution registers in prescribed formats are to be maintained, regularly updated and kept in the Commissionerate Prosecution Cell and in zonal units to enable systematic tracking of prosecution cases.
Circulars Central Excise
Show AI Summary
Prosecution Sanction: mens rea and evidentiary sufficiency determine whether tax evasion prosecution proceeds.
Prosecution proposals for service tax or excise evasion must be examined and forwarded by the adjudicating authority to the sanctioning Principal Chief/Chief Commissioner or Principal/Director General; prosecution requires evidence of mens rea and should not be launched in purely technical or interpretation disputes. Criminal standards (beyond reasonable doubt) must be weighed separately from adjudication findings; prosecution may be initiated before adjudication in serious cases. Investigation reports must be prepared within one month and sanction obtained prior to filing; authorised officers must secure exhibits and coordinate with public prosecutors, with reporting obligations for delays and monthly updates to the sanctioning authority.
Circulars Central Excise
Show AI Summary
Sanction for prosecution: designated senior authorities must authorize and formalize prosecution before filing criminal complaints.
Sanction for prosecution is required before initiating criminal complaints in service tax and central excise matters. The Principal Chief/Chief Commissioner must sanction routine cases, while the Principal Director General/Director General, CEI must sanction cases investigated by the Directorate General of Central Excise Intelligence. The sanctioning authority issues a written order and forwards it to the Commissionerate for expeditious filing of the complaint.
Circulars Central Excise
Show AI Summary
Habitual evasion: prosecution permitted where repeated confirmed demands and substantial cumulative tax evasion or credit misuse.
Prosecution may be initiated against a company or assessee classified as a habitual evader where multiple confirmed demands (at first appellate level or above) for Central Excise duty or Service Tax, or findings of Cenvat credit misuse arising from fraud or suppression, occur within a prior period and the cumulative duty or tax evaded or credit misused meets a substantial monetary threshold; the Offence Register (335J) may be used to identify such assessees.
Circulars Central Excise
Show AI Summary
Prosecution threshold: prosecution requires evasion exceeding the prescribed monetary limit before proceeding for excise or service tax offences.
Prosecution for evasion of Central Excise duty or Service Tax, or misuse of Cenvat credit in relation to offences specified under sub section (1) of Section 9 of the Central Excise Act, 1944 or sub section (1) of Section 89 of the Finance Act, 1994 should normally not be launched unless the evasion meets or exceeds the prescribed monetary threshold set out in the departmental guideline.
Circulars Central Excise
Show AI Summary
Corporate criminal liability: officers and partners can be prosecuted for company service tax or excise evasion.
Persons in charge of and responsible for a company's business are prosecutable alongside the company for service tax or central excise evasion; where an offence by a company is shown to involve the consent, connivance or neglect of a director, manager, secretary or other officer, that individual is deemed guilty. The statutory definition of company includes firms and associations and treats a partner as a director, extending corporate liability principles to service tax prosecutions.
Circulars Service Tax
Show AI Summary
Swachh Bharat Cess applicability: applies to all taxable services except services fully exempt or not leviable to service tax.
Swachh Bharat Cess applies to all taxable services except those that are fully exempt under a statutory notification or are otherwise not leviable to service tax; the cess was imposed by government authority to cover the taxable service base while preserving existing exemptions and non leviability rules.
Circulars Service Tax
Show AI Summary
Cenvat credit reversal does not require separate reversal of Swachh Bharat Cess under the applicable rule per FAQ.
The circular states that Swachh Bharat Cess is not integrated into the Cenvat credit chain; the reversal under Rule 6 requires payment based on the value of exempted services, and therefore a separate reversal of Swachh Bharat Cess is not required when reversing credit under Rule 6 of the Cenvat Credit Rules.
Circulars Service Tax
Show AI Summary
Point of taxation determines Swachh Bharat Cess liability; payment date triggers reverse charge cess on taxable service.
Point of taxation governs SBC liability for reverse-charge services: the date of payment is the point of taxation and SBC is payable on the value of the taxable service at the prescribed rate when consideration is paid to the service provider.
Circulars Service Tax
Show AI Summary
Swachh Bharat Cess option for services under specified service-tax rule; SBC computed by prescribed formula and fixed for financial year.
Persons liable to pay service tax under the sub rules of rule 6 may elect to discharge Swachh Bharat Cess by applying a prescribed computation to their Service Tax liability; once exercised the election must be applied uniformly to such services and cannot be changed during the financial year.
Circulars Service Tax
Show AI Summary
Swachh Bharat Cess on restaurant services is calculated on the value determined under Service Tax valuation rules, creating a combined levy.
Swachh Bharat Cess on restaurant services is payable on the taxable value determined under the Service Tax (Determination of Value) Rules, 2006; for restaurants, eating joints or messes with any air-conditioning or central heating, the cess and service tax are each applied to the portion of the total charge treated as taxable under those rules, and the combined levy is the sum of the service tax rate and the cess rate applied to that taxable portion.
Circulars Service Tax
Show AI Summary
Service tax calculation for services under Rule 2A/2B/2C: apply combined service tax and SBC to the rule determined value.
Service tax and Swachh Bharat Cess on services governed by Rule 2A, 2B or 2C are computed by multiplying the combined service tax plus SBC rate by the value determined under the relevant rule. For works contract services, applying the combined rate to the rule specified taxable fraction of the contract value produces the operative tax liability; the same approach applies to restaurant and outdoor catering services.
Circulars Service Tax
Show AI Summary
Point of taxation for Swachh Bharat Cess: levy applies where service, invoice and payment occur on or after commencement date.
Because SBC is a new levy on taxable services not in the Negative List or wholly exempt, the Point of Taxation Rules determine liability. SBC does not arise where payment and invoice are issued before the levy's commencement or where payment precedes commencement but invoice is issued within the short prescribed period. SBC is chargeable where service provision, invoice issuance and payment occur on or after the commencement date; it also applies if service is provided on or after commencement but payment was received earlier and invoice is not issued within the short post-commencement period.
Circulars Service Tax
Show AI Summary
Cenvat credit of Swachh Bharat Cess disallowed; SBC not in Cenvat credit chain and not payable using credits.
Cenvat credit for the Swachh Bharat Cess (SBC) is not available because SBC is not integrated into the Cenvat credit chain; consequently SBC cannot be claimed as input credit nor paid using credits of any other duty or tax.
Circulars Service Tax
Show AI Summary
Swachh Bharat Cess calculation: SBC applies same abatement percentage as service tax, on combined taxable rate.
Swachh Bharat Cess is to be levied on the same abatement percentage that applies to service tax; the notification prescribing abatement for service tax applies equally to SBC, so the combined rate (service tax plus SBC) is applied to the abated value to determine the effective levy.

TMI Notes

Back

All TMI Notes

Showing Results for :
Reset Filters
No Records Found

TMI Notes

Back

All TMI Notes

whatsapp Join Channel
Showing Results for : Reset Filters

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

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