Quiz for the week (17 Jun 2024):

ahir a resident individual (age 50) is engaged in wholesale business. His total income for the year ended 31st March, 2024 was Rs.20 lakhs. He is expecting his total income to be of the same amount for the financial year 2024-25 also. In May 2024, he sold a vacant land (capital asset) for Rs.40 lakhs with resultant long-term capital gain of Rs.10 lakhs. Advise the amount of advance tax instalments to be paid by him in the financial year 2024-25.

Best Answer :

From the facts given in the question, it is apparent that Zahir can admit his tax liability as per default regime (i.e. section 115BAC) or opt to be governed by the regular provisions in which case he has to file Form 10-IEA. It may be cautioned that in case he has opted for section 115BAC for assessment year 2024-25, he will have to file the said form 10-IEA if wants to switch over to old regime. In case, he has opted for regular (old) regime for the assessment year 2024-25 which he could do by filing form 10-IEA then for the assessment year 2025-26 (i.e. F.Y.2024-25) he need not again file form 10-IEA.

The following is the computation of tax liability under the two regimes:

Section 234C prescribes the instalments of advance tax payable by a taxpayer. The proviso after clause (b) of sub-section (1) of section 234C says that nothing contained in this sub-section (prescribing the instalments of advance tax) shall apply to any short fall in the payment of tax due on the returned income where such short-fall is on account of under-estimate or failure to estimate –

(a) the amount of capital gains; or

(b) income of the nature referred to in sub-section (ix) of clause (24) of section 2 (meant for taxation of any winning from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever); or

(c) income under the head ‘Profits and gains of business or profession’ in cases where the income accrues or arises under the said head for the first time; or

(d) the amount of dividend income,

and the assessee has paid the whole amount of tax payable in respect of the income referred above had such income been a part of the total income, as part of the remaining instalments of advance tax which are due or where no such instalments are due by 31^st day of March of the financial year.

In case the long-term capital gain had arisen after 15^th June but on or before 15^th September, the taxpayer must pay 45% of the tax payable on long-term capital gain by 15^th September.  He must have paid 75% of the tax payable on the long-term capital gain on or before 15^th December and 100% of the tax payable on long-term capital gain before 15^th March.  This is besides the instalment of advance tax payable on regular income.

In the same manner, if the long-term capital gain had arisen after 15^th September but on or before 15^th December, the taxpayer must pay 75% of the tax payable on long-term capital gain by 15^th December and the balance 25% in the March instalment of advance tax.  This is besides the instalment of advance tax payable on regular income.

If the capital gain had arisen after 15^th December, then the tax payer must pay 100% of the tax payable on the said capital gain on or before 15^th March. This is besides the instalment of advance tax payable on regular income.

In case, the capital gain had arisen after 15^th March then the taxpayer must discharge 100% of the tax payable on capital gain by 31^st day of March of the financial year. This is besides the instalment of advance tax payable on regular income.

Prashanth.G
Mysuru