CMA Intermediate · Direct and Indirect Taxation · Advance Tax
Under the Income-tax Act, 2025, an assessee liable to pay advance tax paid it, but the amount paid fell short of 90% of the assessed tax. At what rate is simple interest charged for the shortfall?
Interest for shortfall in advance tax is simple interest at 1% for every month or part of a month, running from 1 April following the tax year, under section 424(1). It is a monthly rate, and part of a month counts as a full month.
- A1% for every month or part of a monthCorrect
- B1% per annum
- C1.5% for every month or part of a month
- D0.5% for every month or part of a month
Explanation
Section 424(1) provides for simple interest at 1% for every month or part of a month. It is not an annual rate. The rate of 1.5% or 0.5% does not appear in the section.
Did you get it right without looking?
One question tells you little. A timed set on Advance Tax shows your real accuracy, how long you take and where you lose marks.
More Advance Tax questions
- Meenakshi Traders Ltd estimates its current income for the tax year at Rs 40,00,000 and calculates income-tax on it at Rs 10,00,000 at the r…
- Under section 406 of the Income-tax Act, 2025, on what base does an assessee who is liable to pay advance tax compute the advance tax payabl…
- Mr. Ramesh Iyer, a resident aged 45 with business income, has paid the first two instalments of advance tax on his own accord based on an es…
- Under section 408(3) of the Income-tax Act, 2025, an advance tax payment made on 28th March 2027 will be treated as advance tax paid:
- In computing the 'assessed tax' for interest under section 424, which of the following is reduced from the tax on the total income?
- Which individual is NOT liable to pay advance tax on his own accord under the Income-tax Act, 2025 because of section 403(3)?