The Income Tax Act provides for charging of interest for non- payment/short payment/deferment in payment of advance tax which is calculated as below:

• INTEREST U/S 234A:

For late or non furnishing of return, simple interest @ 1.25% (substituted in place of 1.5% w.e.f. 1.6.2001) for every month or part there of from the due date of filing of return to the date of furnishing of return, on the tax determined u/s 143(1) or non regular assessment as reduced by TDS/advance tax paid.

• INTEREST U/S 234B:

For short fall in payment of advance tax by more than 10%, simple interest @ 1.25%(substituted in place of 1.5 % w.e.f..1.6.2001) per month or part thereof is chargeable from 1st April of the assessment year to the date of processing u/s 143(1) or regular assessment, on the tax determined u/s 143(1) or on regular assessment less advance tax paid/TDS.

• INTEREST U/S 234C:

For deferment of advance tax. If advance tax paid by 15th September is less than 30% of tax payable on returned income less TDS, simple interest @ 1.25% per month to be charged for 3 months. Similarly, if amount of tax paid on or before 15th December is less than 60% of tax due on returned income, interest @ 1.25% per month is to be charged. Again, if the advance tax paid by 15th March is less than tax due on returned income, interest @ 1.25 % on the shortfall is to be charged.

• INTEREST U/S 234D:

Interest @ 0.5% is levied under this section when any refund is granted to the assessee and on regular assessment it is found that either no refund is due or the amount already refunded exceeds the refund determined on regular assessment. The said interest is levied @ 0.5% on the whole or excess amount so refunded for every month or part thereof from the date of grant of refund to the date of such regular assessment.