Answer / h.r. sreepada bhagi

From Taxation Point (Statutory Payments) of view:

Any amount charged by any tax /government department (Income
Tax, Central Excise, Commercial Tax, EPF, ESI, etc.) for
non-compliance is penalty. For example due date for filing a
tax return is month end. if it's delayed, there may be a
fixed amount to be paid for each day of delay. This is penalty.

Any amount charged by any tax /government department (Income
Tax, Central Excise, Commercial Tax, EPF, ESI, etc.) for
non-payment or delay in payment/remittance is interest. For
example due date for payment of a tax amount month end. if
it's delayed or not paid, a fixed rate of interest will be
charged on the basic amount delayed or defaulted.

Some times the terms interest & penalty are used to mean the
same thing particularly in taxation. (E.g. refer Sections
234 A/B/C of Income tax Act, 1961)

In general interest refers to the amount payable at an
agreed percentage on the money borrowed by the borrower to
the lender. In banks & final institutions, if there is
default or delay in payment of interest, they charge a
higher rate or additional interest and call it as penal
interest.

In any case penalty or penal interest is the result of
failure to comply with the agreed terms, meet the dead line
or pay the dues / instalment on or before the due date.

Answer / valli

Faliure in make Payment of tax attracts penalty

delay in make payment of tax attracts interest

Answer / manjula s.s.

Penalty and interest is differecnce, when the company run
pay sum amt of Entry tax or sales tax when written vat 100
form every month.In one month the tranjaction did not take
place in that month because of posting wrong entry or
negligence of accountant. some month after it is findout by
sales tax officer when he visit the company that time he
will charge penalty. it means we never cheating the
government. he charges some amt of penalty.

Interest it is charged by bank. When the company or a
person take some loan from bank he has to pay the interest
on that loan that is called interest.

I didn't have idea about the rate of penalty and interest.

Answer / rama rao nvs

intrest means whatever we enjoing the credit amount against
that we have to pay actual amount plus additional amount
what % we are decided mutually is called interest.

Where as Panelty we have to pay actual amount, intrest
amount and delay period days amount are called panelty. It
will be lieved on both acutal and Interest.

You give a loan for your friend a 1000 rs he returns 600 rs and u have to close ur accounts what should u do to close the accounts? and given the journal entry for 400 rs?and where will the 400 rs come in new account and entry for that

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