An assessee is liable to pay interest under section 234A if
- Return is furnished after due date of furnishing return or
- Return is not furnished
Rate of interest – 1% (simple interest) per month or part of month
Period – Interest is calculated from the date immediately after due date to the date on which return is furnished or date of completion of assessment under section 144.
Amount on which interest is payable – Tax on total income less advance tax paid, TDS or TCS deducted, relief under section 90/90A/91 and MAT credit under section 115JAA.
Payment of interest is mandatory and there is no option of reduction or waiver of interest.
If self assessment tax is paid before due date of furnishing return but return is furnished thereafter then interest is not payable. If tax is partly paid before due date or paid in instalments after due date then interest is calculated accordingly.