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I'm working as a software engineer in an IT company. I'm filing ITR form-1 for FY 2019-20.

My company had deducted and submitted TDS of around Rs 7000 on 6/01/2020 to IT department. Initially, while filing the ITR, my tax payable was coming as Rs 0.

After adding interest from saving account, my taxable salary became more than 5 lakh.

Now, it's showing tax payable according to the slab(Rs 12500 + 20% of amount above 5 lakh).

This is fine.

However, it's also adding a total of around Rs 4000 interest against below sections:

  • Interest u/s 234B
  • Interest u/s 234C

As per my understanding, salaried professionals shouldn't be considered for advance tax. Is my understanding correct?

If yes, then why the section 234 interest amount is added?

If no, then what is the process and how could I have avoided it? We get our form 16 from company sometime in July then how can we calculate and submit advance tax on time?

Any responses are appreciated!

Thanks Rahul

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  • Are you sure it's 4000 in interest and penalty, it should be more like 350.
    – Dheer
    Sep 18 '20 at 15:12
  • @Dheer - It's 4k.
    – Rahul
    Sep 19 '20 at 12:02
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As per my understanding, salaried professionals shouldn't be considered for advance tax. Is my understanding correct?

No, advance tax is applicable for all. Taxes should be paid as per the schedule, 15% by 15th June, 45% by 15 Sept, 75% by 15th Dec, 100% by 15 Mar.
For salaried class, the TDS takes care of it.

During filing of returns, if your self assessment taxes are more than 10% of total taxes, interest of 1% is charged for the delay on the delta amount that is due. 1% penalty is for payment after March.

If no, then what is the process and how could I have avoided it?

You can check what the interest on savings accounts will be and pay taxes in Advance.

The amount Rs 4000 in interest and penalty looks large. You have TDS of Rs 7000 and total taxes of Rs 13,000. Difference of Rs 6000, 1% is Rs 60; depending on TDS, the payable due from September, so 660. Plus one percent penalty for April Sept, another 660

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  • In my case, under 234C, they have deducted 3% of delta for first 3 quarters and 1% for the last quarter. Also, under 234B, they have deducted Rs 2328 for 6 months. As per my knowledge, they should have deducted 1% only. Why is the interest rate is more than 1% for both 234B and 234C?
    – Rahul
    Sep 25 '20 at 15:38
  • I think it's 1% per month simple interest. So, 3% per quarter for 234C. For 234B, I think it's 6% for 6 months simple interest.
    – Rahul
    Sep 25 '20 at 15:45
  • But I still don't get it how it's being calculated. So, they charge this interest for the period after the particular FY, right? In that case, it's 25/09/2020 today so why they are adding 1% for 16th Dec- 15th Mar period in 234C. Guess I need to research more..
    – Rahul
    Sep 25 '20 at 15:52
  • @Rahul you have to pay tax by dec, as it was paid later, there is interest... so, if Rs 1000 was payable by June, if not paid, there will be simple interest of 1 percent per month from July March... if you don't pay by March, it will be penalty.... like wise if you don't pay by dec, there will be interest till March and penalty after March
    – Dheer
    Sep 26 '20 at 1:45

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