Pay your Income Tax for FY 2019-20 before 31 July 2020 if tax liability is more than Rs 1 lakh
The COVID 19 pandemic has been largely disruptive to the growth of India. With an ever increasing corona virus cases, lockdown was considered as an only solution to flatten the curve. However the measures which were implemented to avoid a human disaster, have in turn led to the birth of several issues such as unemployment, recession, hindrance to economic growth, financial instability and so on.
Due to the emerging financial distress faced by most people on account of the large-scale economic distress caused by COVID 19, the Government of India had extended the due dates of various provisions to provide relief in the current pandemic situation. The Union Finance & Corporate Affairs Minister Smt. Niramla Sitharaman announced several important relief measures taken by the Government of India in view of COVID-19 outbreak, especially on statutory and regulatory compliance matters related to several areas of Income Tax, GST, Customs & Central Excise and Corporate Affairs.
What is self-assessment tax?
- Self-assessment tax refers to any balance tax that has to be paid by an assesse on his assessed income after the TDS and advance tax have been taken into account before filing the return of income of which last date is 31 July 2020
- The IT return cannot be submitted to the IT Department till the time the taxes have been paid.
- At the end of the year, if there is any tax that is pending before filing the ITR, there is a final amount that has to be calculated which is known as the Self-Assessment Tax.
Ministry of Finance (CBDT) issued Notification 35/2020 on 24.06.2020 extending the time limit for filing ITRs, TDS/TCS returns, making investments etc. for AY 2020-21 & 2019-20
Provided below are the latest deadlines pertaining to filing of returns
- The time for filing of original as well as revised income-tax returns for the FY 2018-19 (AY 2019-20) has been extended to 31st July, 2020.
- Due date for income tax return for the FY 2019-20 (AY 2020-21) has been extended to 30th November, 2020.
- To give some relief to the middle class and small taxpayers, the government has extended the due date for payment of self-assessment tax to 30.11.2020. However, as per the notification, this has been done only for those taxpayers whose self-assessment tax liability is up to Rs 1 lakh. Thus, taxpayers whose self-assessment tax liability is more than Rs 1 lakh will not get benefitted from this extension in date. In this case, the whole of the self-assessment tax shall be payable by the due dates specified in the Income-tax Act, 1961 and delayed payment would attract interest under section 234A of the IT Act.
- Interest at the reduced rate of 9% (i.e. 0.75% per month instead of 1% per month) will be charged on delay in respect of following payments made between 20.03.2020 and 30.06.2020.
- The reduced rate of interest of 9% for delayed payments of taxes, levies etc. shall not be applicable for the payments made after 30th June, 2020.
Who is required to pay advance tax?
Under income tax law, if taxpayers’ tax liability is more than Rs 10,000 (except for senior citizen not having business income), then taxpayers are subject to payment of advance tax.
Hence, a taxpayer, who is liable to pay income tax of more than Rs 10,000 in FY 2019-20, is required to discharge its tax liability on or before 15th March 2020 (last date for the last instalment of advance tax). However, under the reliefs provided by government due to Covid-19, the last date for payment of advance tax was extended from 15th March 2020 to 30th June 2020.
Taxpayers who are falling under the cap of Advance tax should discharge their tax liability before 30th June to avoid any interest liability. Interest liability can arise only if tax dues are not paid by the due date prescribed.
What are the various provision of interest under income tax applicable?
The following are the various interest covered for late or short payment of income tax:
1) Interest for delay in filing of Income tax return (Section 234A):
Section 234A, is levied for delay in filing the return of income. Interest is levied at the rate of 1% per month or part of the month simple interest basis. In other words, the taxpayer is liable to pay simple interest at 1% per month or part of a month after 31st July 2020 in case the self-assessed tax liability is more than Rs. 1 lakh. Interest shall be calculated from the 1st August 2020 till the actual date of payment.
2) Interest for default in payment of advance tax (Section 234B):
Apart from above interest the assesse shall be liable for interest 234B and 234C i.e. interest for default in payment of advance tax and interest on deferred payment of advance tax. As per section 234B, interest at 1% per month or part of a month is levied if assesse has paid less than 90% of the advance tax. The nature of interest is simple interest. In other words, the taxpayer is liable to pay simple interest at 1% per month or part of a month for default in payment of advance tax. The period for interest shall be from 1st april of the assessment year till actual date of payment.
3) Interest for deferred payment of advance tax (Section 234C):
As per section 234C, interest is imposed when there is a deferred in payment of an instalment of advance tax. The assesse will pay interest under section 234C as below:
| Period of Amount on which | Rate of Interest | Period of Interest | Amount on which interest is calculated |
| Advance Tax paid on or before June 15 is less than 15% of the total advance tax liability | Simple interest @1% per month | 3 months | 15% of total advance tax less tax already deposited before June 15 |
| If Advance Tax paid on or before September 15 is less than 45% of the total advance tax liability | Simple interest @1% per month | 3 months | 45% of total advance tax less tax already deposited before September 15 |
| If Advance Tax paid on or before December 15 is less than 75% of the total advance tax liability | Simple interest @1% per month | 3 months | 75% of total advance tax less tax already deposited before December 15 |
| If Advance Tax paid on or before March 15 is less than 100% of the total advance tax liability | Simple interest @1% per month | 1 months | 100% of total advance tax less tax already deposited before March 15 |
A person, who is not under the bracket of advance tax, can enjoy this extension relief till 30.11.2020. However, for the rest of the taxpayers it is suggested to pay all their tax liabilities related to FY 19-20 before 30th June 2020 to save interest on taxes and file their returns before the extended date to avoid further interest and penalties.
Due date for payment of Self Assessment Tax where amount payable is Rs 100,000 has not been extended. In case of failure to do so, interest under Section 234A will be levied at 1% per month. This means individual taxpayers need to ascertain their tax liability by 31 July 2020 and discharge the Self-Assessment Tax if the same is Ps 100,000 or more. (for individuals/ certain other taxpayer – 31 July 2020 and for companies/ entities subject to Tax Audit – 31 October 2020).
Self-assessment tax in case of senior citizen FY 2019-20
Senior citizen are not liable for paying advance tax, but in case the total self-assessment tax liability of senior citizen is more than Rs. 1,00,000 than the due date for paying self-assessment tax is on or before 31st July 2020 and not 30th November 2020.
Understanding with examples:
| Total tax liability (A) | Total TDS and Advance tax paid (B) | Self-assessment tax payable (A-B) | Due date of paying self-assessment tax | Is Interest u/s 234A applicable (If paid by due date) | Is Interest u/s 234B applicable | Is Interest u/s 234C applicable |
| 10,00,000 | 9,00,000 | 1,00,000 | 31st July 2020 | No | No (90% advance tax paid) | Yes |
| 10,00,000 | 8,00,000 | 2,00,000 | 31st July 2020 | No | Yes (90% advance tax not paid) | Yes |
| 10,00,000 | 9,50,000 | 50,000 | 30thNovember 2020 | No | No | Yes |
| 1,00,000 | 0 | 1,00,000 | 31st July 2020 | No | Yes | Yes |
| 50,000 | 0 | 50,000 | 30thNovember 2020 | No | Yes | Yes |
The TDS return filing for March 2020 is extended to 31July 2020 and issue Form 16/ Form 16A by 15 August 2020. Thus, the above requirement to pay Self- Assessment Tax puts individual in an impossible situation as updated Form 26AS may not be available to ascertain tax liability and amount of TDS already deducted. Taxpayers need to start following up for obtaining Form 16/ Form 16A so that they can pay Tax on time
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