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CA Intermediate · Taxation · Provisions for filing Return of Income and Self Assessment

Karan Malhotra, a resident individual, has income tax and cess of Rs 2,00,000 on his total income for tax year 2026-27. TDS of Rs 60,000 was deducted during the year, and he paid advance tax of Rs 50,000 on 15 March 2027. He paid the remaining tax as self-assessment tax on 31 July 2027 and filed his return the same day. Ignoring interest for deferment of advance tax instalments and for late filing, what total amount must he pay on 31 July 2027, including interest for shortfall in advance tax payment?

He must pay Rs 93,600. Assessed tax after TDS is Rs 1,40,000, and advance tax paid was only Rs 50,000. The shortfall of Rs 90,000 attracts 1% a month for four months, April to July, which is Rs 3,600. Adding this to Rs 90,000 gives Rs 93,600.

  1. ARs 90,000
  2. BRs 92,700
  3. CRs 93,600Correct
  4. DRs 95,600

Explanation

Assessed tax is 2,00,000 - 60,000 TDS = Rs 1,40,000. Advance tax of Rs 50,000 is below 90% of this, so interest for shortfall in advance tax payment applies at 1% per month from 1 April 2027 up to the month of payment. That period is April, May, June and July, which is 4 months. Interest is (1,40,000 - 50,000) x 1% x 4 = Rs 3,600. Total payable is 90,000 + 3,600 = Rs 93,600. Using 3 months gives Rs 92,700, and charging interest on Rs 1,40,000 gives Rs 95,600.

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