Interest and Late Payment Charges

• Interest under section 234A is levied for delay in filing the return when tax is unpaid.
  
• Section 234B charges interest for failure to pay advance tax.
  
• Section 234C applies interest for deferment or shortfall in advance tax instalments.
  
• Interest is calculated at 1 percent per month or part thereof.
  
• These charges increase the overall tax liability significantly.
  

Penalty and Fines

• Penalty may be imposed for underreporting or misreporting income.
  
• A penalty of 50 percent or 200 percent of tax can be levied for incorrect reporting.
  
• Penalty for failure to file returns may also be applied under section 271F.
  
• Disallowance of business expenses may occur due to non-compliance.
  
• Fines can also apply for non-payment of self-assessment tax before filing.
  

Prosecution and Legal Consequences

• Willful evasion of tax may lead to prosecution under section 276C.
  
• Imprisonment ranging from three months to seven years may be imposed.
  
• False statements or documents can attract prosecution under section 277.
  
• Repeated defaults may be treated as intentional evasion.
  
• Legal proceedings may continue even after assessment is completed.
  

Impact on Refunds and Future Filings

• Refunds will be withheld or adjusted against outstanding tax dues.
  
• Delay in payment may affect the company’s compliance rating.
  
• Subsequent filings may attract more scrutiny and verification.
  
• The company may lose the benefit of carry-forward of losses and deductions.
  
• Returns filed after non-payment may be treated as defective or invalid.
  

Reputational and Regulatory Risks

• Tax default records may be shared with regulatory and banking authorities.
  
• It may affect credit ratings and eligibility for loans or tenders.
  
• Non-compliance may invite notices and audits from tax authorities.
  
• Directors and officers may face personal liability under certain circumstances.
  
• Regular defaults can harm investor confidence and business reputation.