Who are exempt from paying advance tax? Do senior citizens have to pay advance tax?

George

According to the provisions of the Income Tax Act, the assessee is required to estimate his income for the full financial year and calculate income tax thereon at the rates in force for the relevant financial year.

The income tax so calculated is reduced by the amount of income tax that would be deductible or collectible at source from any income which has been taken into account in computing the current income.

The amount of income tax so reduced shall be the advance tax payable. For computing liability for advance tax, income tax calculated above shall not be reduced by the amount of income tax which would be deductible or collectible at source, if such income has been paid/received without deduction or collection of such tax.

Advance tax shall be payable during a financial year if the amount of advance tax payable as calculated above is ₹10,000 or more.

The provisions of payment of advance tax are not applicable to a resident individual who does not have any income chargeable under the head “profits and gains of business or profession” and is 60 years or more at any time during the financial year. Accordingly, senior citizens need not pay advance tax if they do not have income under the head “profits and gains of business or profession”.

I was working in the US till June 2013.While I was in the US and an NRI, I had a bank account in the US and some shares too. I still hold those, though I have become a resident from June 2013.

Should I have declared these holdings as foreign assets on my return?

Rajagopalan

According to the instructions issued with the ITR-2 form for AY 2015-16 (FY 2014-15), a Schedule of Foreign Assets is to be filled up by a Resident and Ordinarily Resident (ROR) assessee. Details of all foreign bank accounts, financial interest in any entity, details of immovable property or other assets located outside India are to be reported. Any income generated/ derived from that asset should also be reported.

I understand that you are an ROR in India since FY 2013-14 (relevant AY 2014-15). Accordingly, you will have to report all foreign assets (US bank account and all the foreign shares) held by you in your income tax return for FY 2013-14 and also offer to tax the income earned from the said foreign assets. In the tax return for the next year, that is, FY2014-15, in addition to the foreign assets, you also need to report the income earned by you from the said foreign assets in the foreign assets annexure.

It may be noted that for FY 2014-15 in case of a foreign citizen, who is in India on a business, employment or student visa, an asset acquired during any previous financial year in which he was non-resident, is not mandatory to be reported.

This exception is applicable only if no income is derived from that asset during the current financial year.

The writer is a practising chartered accountant. Send your queries to taxtalk@thehindu.co.in

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