Hi Srikanth,
In FY2014-15, I had large capital gains realized in Q1 (May 2014), which was actually higher than my annual salary. I paid advance tax on the capital gains - 30% by Sep 15, 2014, additional 30% by Dec 15, 2014, and the rest by Mar 15, 2015. The tax on salary was deducted by my employer monthly. I had no tax due as on Mar 31, 2015 (in fact had some amount due as refund). Filed the return well before the due date.
CPC sent the return for processing to my local IT AO and I received the demand note recently levying interest u/s 234C. When I met the AO with the calculation that including my salary TDS I had met the 30%, 60% and 100% limits for the total tax due, his argument was that since the capital gains was realized in Q1 itself, the entire tax should have been paid by Sep 15th itself. Only when the income is not known, but only estimated, can the advance tax be spread across the installments. Is this argument correct?
If it is correct, how is the interest computed? Can I ask for this computation to be shared? I am able to arrive at the interest computed only as 1% per month of the entire tax due (capital gains + salary) minus only the advance tax paid (and not the TDS on salary).
Thanks in advance,
Subash
1 Answers
Hi,
May be the AO's argument is 'advance tax' on the entire Capital Gains should have been paid by Sep.
My suggestion is to kindly consult a Chartered Accountant and take advice.
Interest Penalty:
Section 234C : Interest at the rate of 1% is payable if the advance taxes are not paid as per the schedule.
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Thanks – that is indeed the AO’s argument.
There is Advance Tax Calculator on Income Tax India website:
https://goo.gl/mPneii
When you select Taxpayer as Individual it opens additional Menu Items which includes Capital Gain. When you click on Show Details under Capital Gains it asks you to input the exact period during which the Capital Gain occurred. You can try it to confirm your query. I think AO is right.
Thank you for sharing your inputs. Appreciate it!