Applicability:
Section 234A(1) of the Income Tax Act, 1961, levies interest if an assessee fails to file their income tax return:
- Under Section 139(1)(Original due date),
- Under Section 139(4)(Belated return), or
- In response to a notice under Section 142(1)(Special notice for filing return).
When is Interest Charged?
Interest is charged if:
- The assessee has unpaid tax liability(after deducting TDS/TCS/Advance Tax).
- The return is not filed by the due date(or notice date under Section 142(1)).
Rate of Interest:
- 1% per month(or part of a month) on the unpaid tax amount.
Period of Interest Calculation:
- From the due date of filing(under Section 139(1)/(4)) till the actual date of filing.
- If a notice under Section 142(1)is issued, interest runs from the notice due date till filing.
Example:
- Due date for filing ITR (Sec 139(1)):31st July 2025
- Actual filing date:15th December 2025
- Tax payable (after TDS/Advance Tax):₹50,000
- Delay:4 months & 15 days → Rounded to 5 months
- Interest (@1% per month):₹50,000 × 5% = ₹2,500
Key Points:
- No interest if no tax is payable(after TDS/Advance Tax).
- Part of a month is treated as a full month(e.g., 15 days delay = 1 month interest).
- Applies even if return is filed under Section 139(4) (belated return).
- Separate from late filing fee (Section 234F).