Penalties Section 234A — Interest for Default in Furnishing Return
Section 234A — Interest for Default in Furnishing Return
Income Tax Act 1961 — 234A
The Penalty
1% per month or part thereof (simple interest)
- Cap
- None — accumulates until return is filed
- Calculation base
- Tax assessed minus TDS deducted minus advance tax paid minus self-assessment tax paid before due date
- Period
- From the day after due date of return to the date of furnishing return (or date of assessment order, whichever is earlier)
When does this apply?
Tax due (net of TDS and advance tax) is outstanding at the time the return should have been filed
Calculate this amount
This estimate applies only the rate and caps published in the authored rule for this page.
Worked examples
| Scenario | Calculation | Result |
|---|---|---|
| Tax due ₹1,00,000, return filed 2 months late | ₹1,00,000 × 1% × 2 = ₹2,000 | ₹2,000 |
| Tax due ₹5,00,000, return filed 4 months late (partial month = full month) | ₹5,00,000 × 1% × 4 = ₹20,000 | ₹20,000 |
| Tax due ₹2,00,000, filed 45 days late (rounds up to 2 months) | 45 days = 2 months (part month = full month) → ₹2,00,000 × 1% × 2 = ₹4,000 | ₹4,000 |
How it is levied
Self-assessed by taxpayer at time of filing; also levied by AO in assessment/reassessment. No separate notice required.
Whether s.234A interest applies when TDS fully covers tax liability but return is filed late — technically, if net tax payable (tax minus TDS) is NIL, s.234A interest = NIL even if return is late. Confirm with your CA for the specific case. For tax year 2026-27 onward: confirm 1% p.m. rate under s.423, ITA 2025.