Clarification Regarding Advance Tax. Dear Sir, I am Neeraj Gupta from Delhi. I want a clarification on Payment of advance Tax in following Situations: 1. LTCG : I booked LTCG on mutual fund in May 2023. The LTCG amount is Rs. 125276/-only. Should I Pay advance tax and When? As per my understanding Rs. 1 Lakh in a financial year is Tex free. The Tax liability on rest of the amount is @ 2600/- only. I learnt that the tax liability of more than Rs. 10000/- need to be paid in respective quarter. Hence, pl. clarify. 2. Saving Bank Interest: What is the advance tax payment liability on the interest ( if more than Rs. 10000/-) from Saving Bank Account ? 3. Accural Interest : Interest on long term deposit is componded annually ( Specially Post office) . When should I pay Advance tax on accrual interest ? waiting for your Reply.

Ans: Since you are above 60 years old resident Indian and you don’t have income chargeable to tax under the head ‘Profits and gains of business or profession’, you don’t need to pay advance tax.

You can show the LTCG from sale of Mutual funds while filing your yearly income tax returns.

Ans: Hi Neeraj,

I understand your confusion about advance tax and how it applies to your income sources. Let's break it down for each source and see how you can navigate it effectively.

Interest on Savings Account:

You're right; predicting the exact interest earned on your savings account can be tricky.
But here's a good strategy: Estimate the total interest you earned in the previous year and pay advance tax based on that.
This might lead to a slight mismatch, but it's better than facing a demand notice later.
Kisan Vikas Patra (KVP):

The compounded interest on KVP does add a layer of complexity.
However, you can still estimate the annual interest based on the KVP maturity value and the interest rate.
Pay advance tax considering this estimated interest. Remember, it's better to overestimate than underestimate to avoid interest charges under Section 234C.
Mutual Funds:

This is where it gets a bit trickier. Since you book profits at unpredictable times, estimating advance tax solely on mutual funds can be challenging.
Two options can help:
Consider Past Performance: Look at your past year's mutual fund gains and pay a conservative advance tax based on that.
Staggered Payments: Pay advance tax in installments throughout the year. This way, even if you book a large profit later, you've already paid some tax towards it, reducing your final tax liability.
Additional Tips:

A Certified Financial Planner (CFP) can help you with more personalized tax planning strategies. They can analyze your income sources, investment plans, and tax bracket to suggest an optimal advance tax payment plan.
The Income Tax Department website has an advance tax calculator that can be a helpful tool for estimation.
About the Demand Notice:

It's understandable that you're frustrated with the lack of clarity from the Income Tax Department.
You can try contacting their grievance cell or visiting their office for a more detailed explanation of the demand notice.

If you receive a demand notice for advance tax, it's essential to respond promptly and seek clarification from the Income Tax Department if needed. Explaining your situation and providing supporting documents can help resolve any discrepancies.

Remember:

Paying advance tax helps you avoid interest charges and penalties under Section 234A and 234C.
Even if your estimates aren't perfect, it's better to pay some advance tax than none at all.
Moving Forward:

By understanding how advance tax applies to your income sources and using the strategies mentioned above, you can ensure a smoother tax filing experience in the future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Senior citizen not having business income are not required to pay advance tax