Exemption from Advance Tax to Resident Senior Citizen under Income Tax

By | June 7, 2018
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(Last Updated On: June 7, 2018)

EXEMPTION FROM PAYMENT OF ADVANCE TAX TO RESIDENT SENIOR CITIZEN

This article analysis Income Tax Act 1961 provisions [As amended by Finance Act, 2018] relating to  Advance Tax on Senior Citizen with examples and Exemption from Advance Tax to Resident Senior Citizen under Income Tax. For Advance Tax provisions on other than Resident Senior Citizen refer Advance Income Tax Provisions, Payment Challan, Utility & Examples

Advance Tax provisions for Resident Senior Citizen

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.[ Refer Advance Tax Due Dates  ]

However, as per section 207 of Income Tax Act, 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

Mr. Kapoor (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. Kapoor 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

Mr. Sunil (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. Sunil 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. Sunil is not a senior citizen as per the Income-tax Law and, hence, he is not exempted from payment of advance tax.

Refer How to compute and pay advance tax ?

Illustration

Mr. Mohan (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. Mohan 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. Mohan 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”.

Refer How to compute and pay advance tax ?

Illustration

Mr. Raja (a non-resident and age 63 years) is a retired person, earning rental income of  Rs. 40,000 per month from a property located in Delhi. He is residing in Canada. Apart from rental income, he does not have any other source of income. Will he be liable to pay advance tax in India?

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”

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, Mr. Raja is a nonresident as per Income-tax Law, and, hence, he cannot claim the benefit of exemption from payment of advance tax. In other words, Mr. Raja will be liable to pay advance tax.

Illustration

Essem 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.

Refer How to compute and pay advance tax ?

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Multiple Choice Questions on Advance Tax on Senior Citizen

MCQ ON EXEMPTION FROM PAYMENT OF ADVANCE TAX TO RESIDENT SENIOR CITIZEN

Q1.As per section 207, ____________ not having any income from business or
profession is not liable to pay advance tax.

(a) A resident individual who is of the age of below 60 years
(b) A resident HUF
(c) A non-resident individual
(d) A resident senior citizen (i.e., an individual of the age of 60 years or above)

Correct answer : (d)
Justification of correct answer :

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.
Thus, option (d) is the correct option

Q2.As per section 207,aresident individualwho is of the age of below 60 years not having
any income from business or profession is not liable to pay advance tax.
(a) True (b) False
Correct answer : (b)

Justification of correct answer :
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.
Thus, the statement given in the question is false and hence, option (b) is the correct
option.

Q3.As per section 208, every person whose estimated tax liability for the year exceeds
___________, shall pay his tax in advance in the form of “advance tax”.
(a) Rs. 5,000 (b) Rs. 10,000
(c) Rs. 25,000 (d) Rs. 50,000
Correct answer : (b)
Justification of correct answer :
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, option (b) is the correct option.
Q4.Exemption from payment of advance tax under section 207 is also available to anonresident
senior citizen (i.e., an individual of the age of 60 years or above)not having any
income from business or profession.
(a) True (b) False
Correct answer : (b)
Justification of correct answer :
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, exemption under section 207 is not available to any taxpayer who is a
non-resident or to a resident who is not a resident senior citizen not having income from
business or profession.
Thus, the statement given in the question is false and hence option (b) is the correct
option

Q5.A resident partnership firm not having income from business or profession can claim
exemption from payment of advance tax under section 207.
(a) True (b)False
Correct answer : (b)
Justification of correct answer :
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, a resident partnership firm not having income from business or
profession cannot claim exemption from payment of advance tax under section 207.
Thus, the statement given in the question is false and hence, option (b) is the correct
option.
Q6.A resident corporate taxpayer cannot claim exemption from payment of advance tax
under section 207. However, a resident HUF can claim such exemption.
(a) True (b) False
Correct answer : (b)

Justification of correct answer :
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, a taxpayer who is not a resident senior citizen (i.e., an individual of
the age of 60 years or above) not having any income from business or profession cannot
claim exemption under section 207.
Thus, the statement given in the question is false and hence, option (b) is the correct
option.

Q7.A resident individual who is of the age of 60 years not having any income chargeable
to tax under the head “Profits and gains of business or profession” can claim exemption
under section 207.
(a) True (b) False
Correct answer : (a)
Justification of correct answer :
A resident individual who is of the age of 60 years or above at any time during the year
and is not having any income chargeable to tax under the head “Profits and gains of
business or profession” is not liable to pay advance tax.
Thus, the statement given in the question is true and hence, option (a) is the correct
option.

Q8.A resident individual who is of the age of 60 years or above as/at
_______________not having any income chargeable to tax under the head “Profits and
gains of business or profession” can claim exemption under section 207.
(a) On the first day of the financial year (b) On the last day of the financial year
(c) At any time during the year (d) On 30th September of the financial year
Correct answer : (c)
Justification of correct answer :
A resident individual who is of the age of 60 years or above at any time during the year
not having any income chargeable to tax under the head “Profits and gains of business or
profession” can claim exemption under section 207.
Thus, option (c) is the correct option.

Q9.As per section 207, only a resident senior citizen being a female of the age of 60
years or above not having any income from business or profession is not liable to pay
advance tax.
(a) True (b) False
Correct answer : (b)
Justification of correct answer :
As per section 207, a resident senior citizen (whether male or femaleof the age of 60
years or above) not having any income from business or profession is not liable to pay
advance tax.
Thus, the statement given in the question is false and hence, option (b) is the correct
option.

Q10.A resident senior citizen (i.e., an individual of the age of 60 years or above) engaged
in the business of plying, hiring or leasing of goods carriages and adopting the provisions
of section 44AE can claim the benefit of exemption available under section 207.

(a) True (b) False
Correct answer : (b)
Justification of correct answer :
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, a resident senior citizen having income from business or profession
cannot claim the benefit of exemption available under section 207.
Thus, the statement given in the question is false and hence, option (b) is the correct
option

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