Section 214 of Income Tax Act "Interest payable by Government"
214. (1) The Central Government shall pay simple interest at fifteen per cent per annum on the amount by which the aggregate sum of any instalments of advance tax paid during any financial year in which they are payable under sections 207 to 213 exceeds the amount of the assessed tax from the 1st day of April next following the said financial year to the date of the regular assessment for the assessment year immediately following the said financial year, and where any such instalment is paid after the expiry of the financial year, during which it is payable by reason of the provisions of section 213, interest as aforesaid shall also be payable on that instalment from the date of its payment to the date of regular assessment :
Provided that in respect of any amount refunded on a
provisional assessment under section 141A, no interest shall
be paid for any period after the date of such provisional
assessment.
(1A) Where as a result of an order under section 147 or
section 154 or section 155 or section 250 or section 254 or
section 260 or section 262 or section 263 or section 264 or
an order of the Settlement Commission under sub-section (4)
of section 245D, the amount on which interest was payable
under sub-section (1) has been increased or reduced, as the
case may be, the interest shall be increased or reduced
accordingly, and in a case where the interest is reduced,
the Assessing Officer shall serve on the assessee, a notice
of demand in the prescribed form specifying the amount of
the excess interest payable and requiring him to pay such
amount ; and such notice of demand shall be deemed to be a
notice under section 156 and the provisions of this Act
shall apply accordingly.
(2) On any portion of such amount which is refunded under
this Chapter, interest shall be payable only up to the date
on which the refund was made.
(3) This section and sections 215, 216 and 217 shall not
apply in respect of any assessment for the assessment year
commencing on the 1st day of April, 1989, or any subsequent
assessment year and, in the application of the said sections
to the assessment for any earlier assessment year,
references therein [except in sub-section (1A) and
sub-section (3) of section 215] to the other provisions of
this Act shall be construed as references to those
provisions as for the time being in force and applicable to
the relevant assessment year.
Explanation 1.-In this section, "assessed tax" shall have
the same meaning as in sub-section (5) of section 215.
Explanation 2.-Where, in relation to an assessment year, an
assessment is made for the first time under section 147, the
assessment so made shall be regarded as a regular assessment
for the purposes of this section.
215. (1) Where, in any financial year, an assessee has paid advance tax under section 209A or section 212 on the basis of his own estimate (including revised estimate), and the advance tax so paid is less than seventy-five per cent of the assessed tax, simple interest at the rate of fifteen per cent per annum from the 1st day of April next following the said financial year up to the date of the regular assessment shall be payable by the assessee upon the amount by which the advance tax so paid falls short of the assessed tax :
Provided that in the case of an assessee, being a company,
the provisions of this sub-section shall have effect as if
for the words "seventy-five per cent", the words
"eighty-three and one-third per cent" had been substituted.
(2) Where before the date of completion of a regular
assessment, tax is paid by the assessee under section 140A
or otherwise,-
(i) interest shall be calculated in accordance with the
foregoing provision up to the date on which the tax is so
paid ; and
(ii) thereafter, interest shall be calculated at the rate
aforesaid on the amount by which the tax as so paid (in so
far as it relates to income subject to advance tax) falls
short of the assessed tax.
(3) Where as a result of an order under section 147 or
section 154 or section 155 or section 250 or section 254 or
section 260 or section 262 or section 263 or section 264 or
an order of the Settlement Commission under sub-section (4)
of section 245D, the amount on which interest was payable
under sub-section (1) has been increased or reduced, as the
case may be, the interest shall be increased or reduced
accordingly, and-
(i) in a case where the interest is increased, the Assessing
Officer shall serve on the assessee, a notice of demand in
the prescribed form specifying the sum payable, and such
notice of demand shall be deemed to be a notice under
section 156 and the provisions of this Act shall apply
accordingly;
(ii) in a case where the interest is reduced, the excess
interest paid, if any, shall be refunded.
(4) In such cases and under such circumstances as may be
prescribed, the Assessing Officer may reduce or waive the
interest payable by the assessee under this section.
(5) In this section and sections 217 and 273, "assessed tax"
means the tax determined on the basis of the regular
assessment (reduced by the amount of tax deductible in
accordance with the provisions of sections 192 to 194,
section 194A, section 194C, section 194D, section 195 and
section 196A so far as such tax relates to income subject to
advance tax and so far as it is not due to variations in the
rates of tax made by the Finance Act enacted for the year
for which the regular assessment is made.
(6) Where, in relation to an assessment year, an assessment
is made for the first time under section 147, the assessment
so made shall be regarded as a regular assessment for the
purposes of this section and sections 216, 217 and 273.