As per the provision u/s 208 of the I T Act, if your tax liability in a year is more than Rs 5,000 , then you must deposit advance tax .
Section 234C imposes interest @ 1 % for shortfall in payment as per following schedule
- 30 % of (Tax on Return income –TDS) by 15th September
- 60% (Tax on Return income –TDS) by 15th December
- 100 % (Tax on Return income –TDS) by 15th March
Now , let us say , you have got a short term capital gains of Rs 10 Lakh in the month of February . Naturally, when the tax will be computed , it will be seen that during September and December there is shortfall in payment of advance tax . So, should the interest u/s 234C be paid for that period ?
No, since the proviso under section 234 C provides that in such situation interest u/s 234 C shall not be imposed as the provision u/s 234C(1) is not applicable in case short fall in payment of advance tax is due to following reason
1. Capital gains
2. Income from prizes, lotteries ,horse race, card games, given in section 2(24)(ix)
No, since the proviso under section 234 C provides that in such situation interest u/s 234 C shall not be imposed as the provision u/s 234C(1) is not applicable in case short fall in payment of advance tax is due to following reason
1. Capital gains
2. Income from prizes, lotteries ,horse race, card games, given in section 2(24)(ix)
Therefore , whenever you have capital gains or income of nature described in section 2(24)(ix) i.e lottery ,prizes,race course winnings etc, you must give attention that computation of interest u/s 234C is considering the period of months after the month in which those income i.e capital gains or income from prize or lottery or horse race arose and not before that. That will save you interest u/s 234C!
However, remember no such provision is for interest u/s for default Section 234B of the I T Act.
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