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

Mr. Sandeep Verma's tax on total income for the tax year 2026-27 is Rs 80,000. TDS of Rs 30,000 was deducted on his income. He paid no advance tax. He paid the balance as self-assessment tax and filed his return on 12 September 2027, the due date being 31 July 2027. Ignoring the late filing fee and interest for advance tax shortfall, what is the interest for delay in furnishing the return, charged at 1% per month or part of a month?

The interest is Rs 1,000. It is charged at 1% per month or part of a month on the tax left after TDS, which is Rs 50,000, for two months (August and part of September). Using the full Rs 80,000 as the base would be incorrect.

  1. ARs 500
  2. BRs 1,000Correct
  3. CRs 1,500
  4. DRs 1,600

Explanation

Interest runs on tax remaining after TDS and advance tax: 80,000 - 30,000 = Rs 50,000. The delay runs from 1 August to 12 September, which is August (1 month) plus part of September (1 month) = 2 months. Interest is 50,000 x 1% x 2 = Rs 1,000. Using Rs 80,000 as the base gives Rs 1,600, which is wrong because TDS is not deducted.

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