Dear sir, today is the last date for first advance tax due for this FY. Can you reply to my query so that I will make payment if applicable? Eagerly waiting for your reply.

Ans: As per income tax circular 9/2015 for CONDONATION OF DELAY IN FILING REFUND, The Principal Commissioners of Income-tax/Commissioners of Income-tax (Pr.CsIT/CsIT) shall be vested with the powers of acceptance/rejection of such applications/claims if the amount of such claims is not more than Rs.10 lakhs for any one assessment year.

Power of acceptance/rejection of the application will be subject to satisfaction that it is the case of genuine hardship on merits and necessary inquiry in made to ascertain the correctness of claim.

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: If advance tax is missed, quarterly interest of 3% will be levied. If advance tax is not paid by 15th Sep, additional interest will be charged.