Exemption from advance tax

exemption from advance tax

Exemption from advance tax is provided to senior citizen who don’t have any business income under section 207

SENIOR CITIZEN NOT HAVING BUSINESS INCOME EXEMPT FROM ADVANCE TAX

As per section 208 every person whose estimated tax liability for the year exceeds Rs. 10,000, shall pay his tax in advance in the form of “advance tax”.

Thus, any taxpayer whose estimated tax liability for the year exceeds Rs. 10,000 has to pay his tax in advance by the due dates prescribed in this regard.

However, as per section 207, a resident senior citizen (i.e., an individual of the age of 60 years or above) not having any income from business or profession is not liable to pay advance tax.

In other words, if a person satisfies the following conditions, he will not be liable to pay advance tax:

1) He is an individual

2) He is resident in India as per the Income-tax Act

3) He is of the age of 60 years or above at any time during the year

4) He is not having any income chargeable to tax under the head “Profits and gains of business or profession”

Illustration 1:

Mr. Kishore (resident and age 65 years) is a retired person, earning rental income of Rs. 40,000 per month. Apart from rental income, he does not have any other source of income. Will he be liable to pay advance tax?

Any taxpayer whose estimated tax liability for the year exceeds Rs. 10,000 has to pay his tax in advance by the due dates prescribed in this regard. However, if a person satisfies the following conditions, he will not be liable to pay advance tax:

1) He is an individual

2) He is resident in India as per the Income-tax Act

3) He is of the age of 60 years or above

4) He is not having any income chargeable to tax under the head “Profits and gains of business or profession” In this case Mr. Kishore is a resident as per Income-tax Law. His age is 65 years and he is not having any income chargeable to tax under the head “Profits and gains of business or profession”. Thus, he satisfies all the above conditions and, hence, he will not be liable to pay advance tax

Illustration 2:

Mr. Shekar (resident and age 56 years) is a retired person, earning rental income of Rs. 40,000 per month. Apart from rental income he does not have any other source of income. Will he be liable to pay advance tax?

Any taxpayer whose estimated tax liability for the year exceeds Rs. 10,000 has to pay tax in advance by the due dates prescribed in this regard. However, if a person satisfies the following conditions, then he will not be liable to pay advance tax:

1) He is an individual

2) He is resident in India as per the Income-tax Act

3) He is of the age of 60 years or above

4) He is not having any income chargeable to tax under the head “Profits and gains of business or profession”

In this case Mr. Shekar is a resident as per Income-tax Law. His age is 56 years and he is not having income chargeable to tax under the head “Profits and gains of business or profession”. He satisfies all the conditions except the age criteria of 60 years and, hence, he will be liable to pay advance tax. In other words, Mr. Shekar is not a senior citizen as per the Income-tax Law and, hence, he is not exempted from payment of advance tax.

Illustration 3:

Mr. Murali (resident and age 61 years) is a retired person earning rental income of Rs. 40,000 per month. After retirement from his job, he started his own business of provision shop. Will he be liable to pay advance tax?

Any taxpayer whose estimated tax liability for the year exceeds Rs. 10,000 has to pay his tax in advance by the due dates prescribed in this regard. However, if a person satisfies the following conditions, then he will not be liable to pay advance tax:

1) He is an individual
2) He is resident in India as per the Income-tax Act

3) He is of the age of 60 years or above

4) He is not having any income chargeable to tax under the head “Profits and gains of business or profession”

In this case Mr. Murali is a resident as per Income-tax Law. His age is 61 years and he is having income chargeable to tax under the head “Profits and gains of business or profession”. He satisfies all the conditions except the business/profession income criteria. Hence, he will be liable to pay advance tax. In other words, Mr. Murali will be liable to pay advance tax because he is having income chargeable to tax under the head “Profits and gains of business or profession”

Illustration 4:

Raj Enterprises, a partnership firm, owns a property in Delhi. The property is given on rent of Rs. 40,000 per month. Apart from rental income, the firm is not having any source of income. Will the firm be liable to pay advance tax?

The exemption from payment of advance tax is available to a resident individual who is of the age of 60 years or above and who does not have income chargeable to tax under the head “Profits and gains of business or profession”. In this case, the taxpayer is a partnership firm and, hence, the exemption will not apply to it, thus, the firm will be liable to pay advance tax.

 

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