Do senior citizens need to pay advance income tax on pension, interest and capital gains?

Do senior citizens need to pay advance tax

Many retirees are unsure whether they must pay advance tax when their income comes only from pension, bank interest, dividends or capital gains. Today's Ask Wallet Wise query decodes how senior citizens enjoy a key exemption that most taxpayers don’t.

Moneycontrol's Ask Wallet Wise initiative offers expert advice on matters of personal finance and money. You can email your queries to askwalletwise@nw18.com, and we will try and get a top financial expert to address your queries.

Does a senior citizen have to pay advance tax if his income consists only of pension, bank interest, equity dividends, and LTCG/STCG, and he has no business income such as F&O or intraday gains? If I have, say, Rs 1 lakh of LTCG/STCG in each of the first three quarters and a Rs 2 lakh loss in the third quarter, how will my advance tax instalments be calculated? And if I miss all the instalments, how will interest and penalties be computed? 

Expert's Advice: All taxpayers must pay advance tax if their net tax liability, after reducing TDS/TCS, exceeds Rs 10,000. Advance tax must be paid in four instalments on June 15, September 15, December 15, and March 15 of the financial year.

However, an individual aged 60 or above (a senior citizen for income tax purposes) is exempt from paying advance tax as long as he has no income taxable under “profits and gains of business or profession.” Such a person can pay the entire tax liability while filing the ITR by the due date.

Regarding your second query: if you have Rs 1 lakh of capital gains in each of the first three quarters and a Rs 2 lakh loss in the last quarter, the loss will be adjusted on a FIFO basis. This means you would still have an advance tax liability on Rs 1 lakh of gains in the third quarter, assuming you are not a senior citizen and are otherwise liable to pay advance tax.

Interest would then apply accordingly. If you are a senior citizen, you do not have to pay any advance tax instalments, regardless of the amount of capital gains earned during the year.

Disclaimer: The views expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.

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