New Enroll in RBI Grade B New Batch - Starts on May 21

    Question

       Interest payable u/s 234C is computed

    at?
    A Compound interest @ 1% p.m. Correct Answer Incorrect Answer
    B Simple interest @1% p.a. Correct Answer Incorrect Answer
    C Compound interest @ 1 % p.a. Correct Answer Incorrect Answer
    D Simple interest @1% p.m. Correct Answer Incorrect Answer

    Solution

    Interest payable under Section 234C of the Income Tax Act, 1961 is computed at simple interest at 1% per month or part of a month on the amount of advance tax that is not paid or paid in short. So, the interest is calculated on a monthly basis and not on an annual basis. This means that if a taxpayer fails to pay the advance tax on time, they will be liable to pay interest at 1% per month on the amount that is outstanding.

    Practice Next