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CA Intermediate · Taxation · Tax Deduction or Collection at Source and Advance Tax

Mr. Dhruv, a resident individual carrying on business (not under the presumptive scheme), estimates his advance tax liability for tax year 2026-27 at Rs 2,00,000 after TDS. He pays Rs 30,000 by 15 June, a cumulative Rs 90,000 by 15 September, a cumulative Rs 1,20,000 by 15 December and the entire balance by 15 March. Interest for shortfall in the December instalment, at 1% per month for 3 months, is:

The interest is Rs 900. The cumulative amount due by 15 December is 75% of Rs 2,00,000, which is Rs 1,50,000. Only Rs 1,20,000 was paid, leaving a shortfall of Rs 30,000, and interest at 1% per month for three months gives Rs 900.

  1. ARs 300
  2. BRs 900Correct
  3. CRs 1,500
  4. DRs 3,600

Explanation

Cumulative advance tax due by 15 December is 75% of Rs 2,00,000 = Rs 1,50,000. Paid is Rs 1,20,000, so the shortfall is Rs 30,000. Interest = 30,000 x 1% x 3 months = Rs 900. The June and September instalments were met in full, and the March one was also met. Rs 1,500 wrongly uses a Rs 50,000 shortfall.

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