Representation to refrain from levying interest u/s. 234A for filing return of income for A.Y. 2020-21 within extended deadline of 30 November 2020

We welcome the proactive steps taken by the Government to provide relief to taxpayers on various direct tax compliances by issuing Notification No.35/2020 dated 24 June 2020 under the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020.

The Notification has extended the due dates for several compliances falling due between 20 March 2020 and 31 December 2020. In particular, the time limit for filing return for non-corporate taxpayers and taxpayers liable to audit (other than Transfer Pricing cases) has been extended to 30 November 2020. However, there is no relaxation from payment of interest under section 234A for delayed filing of return except where the self-assessment (SA) tax payable is less than Rs. 1 lakh.

The levy of interest under s.234A for filing of return within the extended due date of 30 November 2020 where SA tax payable is more than Rs. 1 lakh will cause great hardship to many taxpayers (especially senior citizens) who are unable to compile the relevant information in timely manner for computing the SA tax due to disruption caused by COVID-19 pandemic. Since interest under s.234A is for delayed filing of return for which due date is extended till 30 November 2020 and the Government is otherwise compensated for delay in payment of taxes by levy of interest under s.234B, we believe that it is incorrect to levy interest under s.234A amidst the unprecedented and extraordinary circumstances caused by COVID-19 pandemic. We sincerely request for review of the Notification on this aspect.

Our detailed representation on the issue is attached herewith for your kind consideration and remedial action.