Allowability of interest paid on delayed payment of Income Tax

As per section 40(a)(ii) of income tax act any sum paid on account of Income Tax ( i.e. any rate or tax levied on the profits or gains of any business or profession) is not deductible. Similarly, any interest, penalty, fine for non-payment or late payment of Income tax is not deductible. This rule is applicable whether Income-Tax payable in India or Outside India.

Hi,

Any sum paid on account of Income Tax ( i.e. any rate or tax levied on the profits or gains of any business or profession) is not deductible. Similarly, any interest, penalty, fine for non-payment or late payment of Income tax is not deductible.

You can't set off interest under section 234 with 244A.

Please feel free to call/ revert in case you need more clarity

Thanks and regards

Abhishek Dugar

CA CS B.Com

NO INTEREST U/S 234 NOT ALLOWED AS EXP AND YOU CANT ADJUST INTEREST RECEIVED U/S 244A AGAINST 234 INTT

1. No. Any payment of income tax (or the same nature) is not deductible while computing income from business.

2. No, interest under section 234 cannot be set off against interest income under section 244A.

Hello,

No, the interest paid cannot be claimed as an expense but is disallowed since it is in the nature of penalty because of the default of the assessee. Any payment in the nature of interest or penalty cannot be claimed as an expense.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, FCA, LLB, CERT. FAFP

Hi,

Any amount paid in the form of interest/ penalty shall be disallowed and cannot be claimed as expense while filing Income Tax Returns.

Regards,

Keerthiga Padmanabhan

M.Com., CA, LL.B