As per a press release from the Central Board of Direct Taxes on June 24, 2020, no extension has been granted to individuals having self-assessment tax liability of over Rs 1 lakh for FY 2019-20. Further, delayed tax payments would attract penal interest. Individuals with a self-assessment tax liability of less than Rs. 1 lakh however have time until November 30, 2020.
If the total self-assessment tax amount to pay for FY 2019-20 before return filing exceeds Rs 1 lakh, the tax due is to be deposited before July 31, 2020. Penal interest is payable if this deadline is missed.
Penal interest under Sec 234A is levied if self-assessment tax is paid after the ITR filing due date. Interest is levied at the rate of 1% monthly / for part of a month on a simple interest basis.
If the self-assessment tax is deposited after July 31, 2020, here’s how penal interest will be calculated:
Let us assume Nitish, a salaried employee is required to file a tax return for FY 2019-20. His total income and tax computation is given below:
Gross total income Rs. 18,00,000
(-) Deductions Rs. 2,00,000 (deductions under Sec 80C, 80D, medical insurance premium, ELSS, PPF, HRA)
Total income Rs. 16,00,000
Income Tax Payable Rs. 3,04,200
(-) TDS deducted Rs. 90,000 (TDS of Rs. 80,000 on salary income and a TDS of Rs. 10,000 on FD Interest)
Total Tax Payable Rs. 2,14,200
Thus, Nitish has to pay the self-assessment tax of Rs.2,14,200 on or before 31st July 2020.
If Nitish delays the tax payment by 10 days, an additional interest of 1% under Sec 234A is payable, ie, Rs. 2142/-. The interest charge will be for the entire period of delay, including even part of a month.
While calculating the self-assessment tax, any advance tax payments and any other tax credits like foreign tax credit on foreign income can also be reduced from the advance tax payment to be made.
For any questions/feedback on your tax calculations or tax consultation, please feel free to contact your tax experts at GKM. (https://www.gkmtax.in)