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Advance tax isn’t applicable to senior citizens with no income from business or profession


I had gifted some shares to my husband five years ago. If he wants to sell them now, how will the gains be taxed and how much?

—Priyanka Aditi

We have assumed that the shares are listed on a recognized stock exchange in India.

The gains from the shares gifted by you shall be clubbed as taxable income in your hands and not your husband’s. However, income generated from any investments made by your husband from capital gains or dividends from such shares need not be clubbed with your taxable income and would be taxable in his hands.

As the shares were held by both of you for more than 12 months from the date of allotment, the gains would be taxable as long-term capital gains (LTCG). Currently, LTCG on the sale of shares listed in India is taxable to the extent it exceeds 1 lakh in a given tax year at 10% (plus applicable surcharge and cess).

The cost for the purpose of computation of LTCG shall be the highest listed price of the shares as on 31 January 2018 (in place of the actual cost of purchase as incurred by you), provided the listed price as on 31 January 2018 is less than the sale value. However, where the sale value is less than the listed price as on 31 January 2018, the cost shall be the higher of the sale value or actual cost.

A roll-over exemption can be sought by you against this LTCG under Section 54F of the Income-tax Act by purchasing or constructing a residential house property in India, subject to the prescribed conditions and timelines.

I started receiving rental income in June 2020. Should I pay advance tax on this income, or should I pay at the time of filing my income tax return (ITR)?

—Sunil Joseph

Rental income from a house property will be taxable in your hands under the head “income from house property”. A standard deduction of 30% of the annual rental value (gross rent received less actual municipal taxes paid), actual municipal taxes paid and interest on loan taken for acquiring the property can be set off from the gross rental income to arrive at the taxable income. In case you have loss from any other property owned by you or any brought forward property losses, the same can be set off against this income, within prescribed limits.

The tenant, according to the tax status, may deduct tax at source (TDS) on rent paid.

Payment of advance tax will depend on various factors like the quantum of overall income (including this income) and tax liability, TDS withheld, age of the tax payer, among others.

Advance tax is applicable if your tax liability (net of taxes deducted or collected at source) on your total income (including income from property) for FY21 is 10,000 or more. Such tax is to be paid in advance, as per the four prescribed instalments. Advance tax is not applicable for a resident senior citizen who does not derive any income from business or profession.

Any delay or deferment in payment of advance tax will have interest implications and the same would need to be paid along with self-assessment tax payable by you, prior to filing your ITR for FY21.

Parizad Sirwalla is partner and head, global mobility services, tax, KPMG in India. Queries and views at [email protected]

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