Taxpayers Shocked by Higher Interest Charges on Advance Tax: Income Tax System Flaws

• Taxpayers are reporting higher interest calculations under Sections 234B and 234C in income tax intimations compared to their own computations.
• The Income Tax processing system (CPC) appears to ignore the actual accrual date of capital gains, treating them as existing from the start of the financial year.
• This leads to retrospective interest charges on income that had not yet arisen, contrary to Section 234C provisions for income arising after due dates.
• Experts suggest providing a proper breakup of capital gains and dividends in Schedule CG/IFOS of ITR to avoid incorrect interest levies.
• Taxpayers can file a rectified ITR under Section 154 to correct interest calculations if the initial filing lacked proper breakup details.

Why It Matters: Income Tax system's flawed interest calculation on advance tax is causing undue burden on taxpayers.