Personal Finance

Tax Query: Does a senior citizen pay advance tax on capital gains?

Sudhakar Sethuraman | Updated on September 04, 2021

I am 72 years old and invest regularly in the share market.

I bought shares of a company two years back and sold it yesterday.

I made a profit of nearly ₹2 lakh. My other incomes, including from interest on FDs and rent, add up to ₹3.20 lakh approximately in the current financial year.

With the above profit of ₹2 lakh, it may go up to ₹5.20 lakh approximately. Can you please explain the tax liability now?

Am I required to pay advance income tax?

L Venkatraman

A resident senior citizen (age of 60 years or above) not having any business income is not liable for advance tax payment.

As a senior citizen, you are not required to pay advance tax on an assumption that you qualify as a resident of India.

Since the shares are listed and have been held for over two years, the capital gain on their sale would qualify as long-term capital gains.

In terms of section 112A, capital gains up to ₹1 lakh is exempt from tax and gains exceeding this threshold is taxable at 10 per cent, without indexation benefit.

If my son gifts ₹5 lakh to my wife, is she liable to pay any gift tax? If she invests this money, say in a bank FD, is she required to pay income tax on the interests earned? She is now a senior citizen, outside the tax bracket. Kindly clarify

A.R.Ramanarayanan

Gifts received by an individual from his or her relatives are not taxable. Hence, the amount gifted by your son to your wife is not taxable as they qualify as “relatives” within the meaning of section 56(2) of the Income tax Act.

Any income generated out of the gift will be taxable in the hands of your wife.

If her overall income including interest is below the taxable limit, there is no requirement to pay income tax.

The writer is Partner, Deloitte India

Send your queries to taxtalk@thehindu.co.in

Published on September 04, 2021

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