Understanding Advance Tax Rules for Senior Citizens

As per Section 208 of the Income Tax Act, 1961, advance tax is payable when the deemed tax liability exceeds ₹10,000. However, Section 207 has certain provisions on advance tax for senior citizens that exempt them from paying advance taxes.

As per Section 207 of the I-T Act, there are certain conditions to offer exemptions in payment of advance tax for senior citizens. The criteria are: 

• The person must be an ‘individual’ and an Indian resident  

• The individual must be aged 60 years or above

• The individual must not have any taxable income under the head of ‘Profits and Gains of Business or Profession’ (PGBP)

 

If you do not meet these criteria and have an estimated tax liability of more than ₹10,000, you will have to pay advance taxes. According to Section 208, the advance tax payment will be in 4 installments, each paid every quarter.

To help you understand exemptions in the payment of advance tax for senior citizens, here are some examples: 

• Illustration 1

Mr. A, a retired 65-year-old Indian resident, has a monthly rental income of ₹50,000. Since he does not have an income source under PGBP and satisfies other conditions of Section 207, he will be exempt from advance tax payments.  

• Illustration 2

Mrs. X is 70 years old and an Indian resident. However, she opened a provisional store after retirement and earns a monthly income of ₹40,000. Here, Mrs. X will not get an advance tax exemption as she earns income under PGBP. 

• Illustration 3

Mr. Y is a 68-year-old resident Indian who runs an automobile store and earns a monthly income of ₹80,000, which goes under PGBP. Given this, he does not satisfy the criteria laid down in Section 207.  

• Illustration 4

Mrs. Z is a retired non-resident Indian, who has attained 63 years of age. While she earns a monthly income of ₹60,000 by renting out an apartment in India, with no income under PGBP, she is not eligible under Section 207. 

• Illustration 5

Mr. B, who is 59 years old and an Indian resident, has a monthly income of ₹45,000 from rent. Since he does not satisfy the age criterion, he is not exempt from advance taxes.  

• Illustration 6

Partnership firm, ABC Ltd. has a rental income of ₹40,000 every month. Since it is a partnership firm, the provisions for exemption of payments of advance tax for senior citizens are not applicable. The provisions mentioned in Section 207 apply to an individual taxpayer.

 

Paying advance taxes on time is crucial as non-payment or delayed payment attracts an interest penalty of 1%. So, ensure that you understand your eligibility and tax liabilities and pay the required taxes on time. 

 

You can use the Advance Tax Calculator available on the official Income Tax Department website to compute your advance tax liabilities. To pay the advance tax, you can visit the e-filing portal and fill out Challan 280.