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CA Final · Indirect Tax Laws · Payment of Tax

Lakshmi Foods filed its return late. Rs 50,000 was credited to its electronic cash ledger on or before the due date and remained there until debited for tax payment in the late return. Under the proviso to Rule 88B(1), how is this amount treated for interest on delayed payment?

The amount is excluded when calculating interest. The proviso to Rule 88B(1) provides that cash credited to the electronic cash ledger on or before the due date and lying there until debited while filing the late return is not taken into consideration for interest.

  1. AInterest is charged on it for the delay period
  2. BIt is excluded when calculating interestCorrect
  3. CInterest is charged at half the notified rate
  4. DInterest is charged only if the delay exceeds 30 days

Explanation

The proviso to Rule 88B(1) says that an amount credited to the cash ledger on or before the due date and lying there until debited at the time of filing the late return is not considered while calculating interest. Charging interest on it would defeat the proviso.

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