A rising number of taxpayers in India reported that they are getting surprising interest demand notices from the income tax department post-filing the updated ITRs. The Gujarat Chamber of Commerce and Industry (GCCI), concerned about the rising grievances, asked the centre to revise the provisions of the Income Tax Act to remove the uncertainty in interest computations.
The problem is with the interest charged under Section 234B, even after the taxpayers have released their tax obligations at the time of filing updated returns as per Section 140B. Many people who file the updated Income tax returns u/s 139(8A) have been served fresh demands, resulting in confusion and frustration among taxpayers.
From the GCCI’s Direct Tax Committee Chairman, the issue is within distinct interpretations and methods of computing interest. He specified-
“Taxpayers are receiving demand notices after processing updated ITRs, even though tax, interest and fees are required to be fully paid before filing under Section 140B. Ideally, no additional interest demand should arise afterwards. These notices under Section 234B are creating unnecessary hardship.”
GCCI emphasised that the mismatch occurs because the Income Tax Department and taxpayers employ different computational methods, often due to unclear provisions in the law. This discrepancy has led to numerous taxpayers receiving notices, even though they have complied with all tax payment requirements before filing.
For revising the law or issuing a clarification, the chamber has called upon the CBDT and the Union Finance Ministry. It ensures that, because of conflicting interpretations, the taxpayers are not penalised.
As per the assumption of the business body, these revisions shall restore trust, lessen disputes, and ease the updated return compliance procedure rolled out to motivate the voluntary disclosure.
