Amendment of section 234C
89. In section 234C of the Income-tax Act, in sub-section (1), with effect from the 1st day of June, 2016,-
(i) for clause (a), the following clause shall be substituted, namely:-
“(a) an assessee, other than an eligible assessee in respect of the eligible business referred to in section 44AD, who is liable to pay advance tax under section 208 has failed to pay such tax or-
(i) the advance tax paid by such assessee on its current income on or before the 15th day of June is less than fifteen per cent. of the tax due on the returned income or the amount of such advance tax paid on or before the 15th day of September is less than forty-five per cent. of the tax due on the returned income or the amount of such advance tax paid on or before the 15th day of December is less than seventy-five per cent. of the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of one per cent. per month for a period of three months on the amount of the shortfall from fifteen per cent. or forty-five per cent. or seventy-five per cent., as the case may be, of the tax due on the returned income;
(ii) the advance tax paid by the assessee on the current income on or before the 15th day of March is less than the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of one per cent. on the amount of the shortfall from the tax due on the returned income:
Provided that if the advance tax paid by the assessee on the current income, on or before the 15th day of June or the 15th day of September, is not less than twelve per cent. or, as the case may be, thirty-six per cent. of the tax due on the returned income, then, the assessee shall not be liable to pay any interest on the amount of the shortfall on those dates;”;
(ii) in clause (b), for the portion beginning with the words “the assessee, other than a company” and ending with the words “shortfall from the tax due on the returned income”, the following shall be substituted, namely:-
“an eligible assessee in respect of the eligible business referred to in section 44AD, who is liable to pay advance tax under section 208 has failed to pay such tax or the advance tax paid by the assessee on its current income on or before the 15th day of March is less than the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of one per cent. on the amount of the shortfall from the tax due on the returned income:”;
(iii) in the first proviso, below clause (b)-
(I) in clause (b), for the word and figure “section 2”, the words and figure “section 2; or” shall be substituted;
(II) after clause (b), the following clause shall be inserted, namely:-
‘(c) income under the head “Profits and gains of business or profession” in cases where the income accrues or arises under the said head for the first time,’;
(III) in the long line, for the words, brackets and letter “or clause (b)”, the words, brackets and letters “or clause (b) or clause (c)” shall be substituted.
Notes on Clauses:
Clause 89 seeks to amend section 234C of the Income-tax Act relating to interest for deferment of advance tax.
It is proposed to make consequential amendments in sub-section (1) of section 234C, in view of the amendments made in section 211, so as to levy interest on deferment of advance tax, in the same manner as applicable to the company, to an assessee (other than company) also. Further, with regard to an eligible assessee referred to in section 44AD, it is proposed to provide that interest shall be levied, if the advance tax paid on or before the 15th day of March is less than the tax due on the returned income.
It is also proposed to amend the said section so as to provide that nothing contained in the said sub-section (1) shall apply to any shortfall in the payment of the tax due on the returned income where such shortfall is on account of under-estimate or failure to estimate income under the head “Profits and gains of business or profession” in cases where the income accrues or arises under the said head for the first time.
These amendments will take effect from 1st June, 2016.
