Amended and updated notes on section 216 of Income Tax Act 1961 as amended by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to Interest payable by assessee in case of under-estimate, etc.
Chapter XVII (Sections 190 to 234G) of the Income Tax Act 1961 deals with the provisions related to collection and recovery of tax. Section 216 of IT Act 1961 provides for Interest payable by assessee in case of under-estimate, etc.
Recently, we have discussed in detail section 215 (Interest payable by assessee) of IT Act 1961. Today, we learn the provisions of section 216 of Income-tax Act 1961. The amended provision of section 216 is effective for financial year 2022-23 relevant to the assessment year 2023-24.
In this article, you will learn detail of the provisions of section 216 of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962 as provided by Ministry of Law and Justice, Government of India.
Section-216: Interest payable by assessee in case of under-estimate
Where, on making the regular assessment, the Assessing Officer finds that any assessee has—
- (a) under section 209A or section 212 under-estimated the advance tax payable by him and thereby reduced the amount payable in either of the first two instalments; or
- (b) under section 213 wrongly deferred the payment of advance tax on a part of his income;
he may direct that the assessee shall pay simple interest at fifteen per cent per annum—
- (i) in the case referred to in clause (a), for the period during which the payment was deficient, on the difference between the amount paid in each such instalment and the amount which should have been paid, having regard to the aggregate advance tax actually paid during the year; and
- (ii) in the case referred to in clause (b), for the period during which the payment of advance tax was so deferred.
Explanation: For the purposes of this section, any instalment due before the expiry of six months from the commencement of the previous year in respect of which it is to be paid shall be deemed to have become due fifteen days after the expiry of the said six months.