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      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.

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