Levy of additional interest for extended period of due date of tax return- How far justified?

Ved Jain – [2021] 130 taxmann.com 337 (Article)

The Central Board of Direct Taxes vide Circular No. 17 dated 09.09.2021 has extended the due date for filing income tax returns on account of the difficulties being reported by the taxpayers in electronic filing of Income-tax returns of the Tax Portal owing to the glitches in the Tax Portal. However, the taxpayers shall still be required to pay additional interest at the rate of 1% per month under section 234A despite filing the return in the extended period in case the balance tax payable exceeds Rs. 1 lakh.

As per the Clarification 1 appended to the Circular, it has been clarified that the extension of the due date shall not be applicable in respect of provision of section 234A. The implication of this will be that despite filing the return in the extended period, the taxpayers shall be required to pay additional interest at the rate of 1% per month from the original due date of filing tax return i.e. 31.07.2021 in the case of ordinary taxpayers and 31.10.2021 in the case of taxpayers who are required to get their accounts audited, in case the balance amount of tax payable i.e. self-assessment tax payable exceeds Rs. 1,00,000.

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