I think there is a problem with advance tax calculator.
When I enter 5L business income. Advance tax payment liability is 0.
When I enter 100 crore.
You can see image. I think cess and surcharges are missing in this calculator.
Hi @anon1649903,
When your Income is below INR 5 lakh, you are eligible to claim a rebate u/s 87A. Hence, there is no advance tax liability when your Income is less than INR 5lakh.
We are working on integrating surcharge on income above INR 50 Lakh, weâll keep you posted
Hi @Quicko
Do Income tax department checks in which quarter profit from trading was earned? How do they know if someone has earned in Q1 or Q4 of the financial year?
Ideally if someone started trading in Q4 and made profits then the person should not be charged penalty for not paying advance tax.
I am not sure about income from trading, but we do have to report quarter-wise break-up of capital gains in the ITR. I imagine it will be the same for gains from trading. That is how the IT department knows.
Hi @sachinsp15,
The Income Tax Department has tied up with SEBI to exchange the data and curb tax evasion. From which the ITD might have details like sale value, sale date.
Interest on deferment of payment of advance tax for capital gains has been exempted if you pay 100% of the tax on or before 31st March of the financial year.
1 Like
Can you please share surcharges rate on income tax for FY22.
This page on the Income Tax website mentions about the surcharge rate for Assessment Year 2022-23 (aka FY 2021-2022) -
a . Surcharge : Surcharge is levied on the amount of income-tax at following rates if total income of an assessee exceeds specified limits:-
Assessment Year 2022-23Range of Income
Note: The enhanced surcharge of 25% & 37%, as the case may be, is not levied, from income chargeable to tax under sections 111A, 112A and 115AD. Hence, the maximum rate of surcharge on tax payable on such incomes shall be 15%.
However, marginal relief is available from surcharge in following manner-
i. in case where net income exceeds Rs. 50 lakh but doesnât exceed Rs. 1 Crore, the amount payable as income tax and surcharge shall not exceed the total amount payable as income tax on total income of Rs 50 Lakh by more than the amount of income that exceeds Rs 50 Lakhs.
ii. in case where net income exceeds Rs. 1 crore but doesnât exceed Rs. 2 crore, marginal relief shall be available from surcharge in such a manner that the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore.
iii. in case where net income exceeds Rs. 2 crore but doesnât exceed Rs. 5 crore, marginal relief shall be available from surcharge in such a manner that the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 2 crore by more than the amount of income that exceeds Rs. 2 crore.
iv. in case where net income exceeds Rs. 5 crore, marginal relief shall be available from surcharge in such a manner that the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 5 crore by more than the amount of income that exceeds Rs. 5 crore.
Once you exceed 10 crore. You have to pay 42% tax. Better to form a company.
Hi @Quicko
Does that mean if I have short term capital gains due to stock cash delivery profits (not intraday and not FnO) I can pay the total amount due for all quarters combined in the month of March, 2022 and NOT incur any interest or penalties if I donât pay advance tax each quarter.
Is my understanding correct?
Thank you for your assistance.
Hello @zerodhahero
Section 234C of Income tax act, specifically excludes the nature of capital gains income from the purview of advance tax interest liability only if tax payer has paid entire amount of tax related to capital gains by the 31st March of the relevant financial year.
Hope, it helps!
2 Likes
not really as for a company you would need nbfc license.
I know.
1 Like
Hello, @Quicko
What is advance tax requirement for speculative income ?
Should 1) speculative income ( equity intraday ) + 2) STCG + 3) LTCG all paid for by march 31st still attract advance tax penalty ?
Last year most of my income was from intraday equity along with smaller LTCG/STCG from equity/debt.
From what i understood, interest is not charged for advance tax shortfall as long as i pay in full before the FY ends.
Ex from https://www.indiafilings.com/learn/section-234c-of-income-tax-act/
âInterest under Section 234C is not applicable in the event of underestimation or failure in valuing the amount of capital gains or speculative income such as lottery income, gambling income, and the likes of it.â
Last year bulk of my tax liability happened in last 3 months of the year. I paid in few installments in Feb and march and paid about 5k more than my liability by March 31. I did miss out on advance tax in dec quarter when my tax situation was much lower and i was in middle of extended Drawdown ( so losses could have increased reducing income in March)
Now, ITR3 form is showing that i have to pay about 4.6% as interest in âc. Interest for deferment of advance tax(section 234C)â.
rant - govt cant estimate their own deficit numbers but Expect others to magically know the future.
As an extreme example, say below is overall situation for year till date at the end of each quarter
- Jun15/Sept 15 : LTCG 2L, total income from all sources including CG less than 5L.
- Dec 15. LTCG of 2L, speculative income 10L
- March 15 LTCG 2L, STCG 2L, speculative income 50L
- March 31 LTCG 2L, STCG 2L, speculative income 60L
If i pay in this way, will it still attract interest
- Jun15/Sept 15 : No advance tax
- Dec 15: 75% of tax on 10L
- March 15: 100% of tax on 50L
- March 31 : 100% of tax on 60L + 100% of applicable tax on CG
Otherwise, advance tax will become just another cess like tax that we have to pay as there is no way to predict future profits ( and losses ) in trading.
1 Like
If the tax liability of the trader on income earned from trading in F&O and Intraday segment is expected to exceed Rs. 10,000, then they must calculate and pay Advance Tax. This is so as to avoid Interest under Section 234B and 234C. Advance Tax is to be paid in quarterly installments on 15th June, 15th September, 15th December, and 15th March.
As per Income Tax Act, The trader should be able to determine the taxable income for year, calculate tax liability accordingly, and make payment of Advance Tax online.
If you pay in the way you mentioned, It will still attract interest.
Hope this helps!
1 Like
Thanks for your response.
I guess ill consider it as another form of cess and pay advance tax based on current income and possible dd risk.
@Quicko : just to get this clear: In the example that @SpacemanSpiff gave, the interest is charged only because they did not pay advance tax on the speculative (trading) income of 60L. No interest was charged because of non-payment of advance tax on CG, because they did pay 100% of the tax on CG by 31 March. To be more specific, the interest is applied only because they did not pay the following amounts of advance tax:
- 12% of the tax on 60L of trading income by June 15
- 36% of the tax on 60L of trading income by Sep 15
- 75% of the tax on (60L - 10L) = 50L of trading income by Dec 15
(@SpacemanSpiff : the first two percentages are 12 and 36 instead of 15 and 45 because the rules give us this allowance.)
Is this understanding correct? In particular: no interest was charged for delayed payment of advance tax on CG, because they did pay the entire amount of tax by Mar 31. Is this so?
I ask because the link that you provided to your website does not make this clear.
@SpacemanSpiff : The line that you quote from indiafilings.com is somewhat misleading for someone who doesnât already know the rule, because it could be read as saying that the exemption applies to all speculative income. But this is not so: the exemption applies only to certain specific types of speculative income which are listed in section 2(24)(ix), namely:
any winnings from lotteries, crossword puzzles, races including horse races,
card games and other games of any sort or from gambling or betting of any
form or nature whatsoever
(I didnât know this either, till I went digging after reading your comment.)
Since income from trading, while classified as âspeculativeâ, does not fall into any of the above categories, it does not enjoy this exemption.
This tutorial from the IT department is very readable, and illustrates advance tax and interest charged on non-payment of advance tax.
2 Likes
In my case, i was charged interest for delayed payment of capital gains.
I know this because, at present itr form is asking for payment before validation ( stupid ⌠)
In my case, i chose to pay, then saw validation error due to not having reduced capital gains in quarterly breakup by adjusting against Carry forward loss of previous year. After reduction, i now have some refund due as interest reduced. Interest calculation is a black boxâŚ
repeated rant, sry - Quite funny and irritating that govt expects people to estimate full year taxes magically and pay tax on income that we may never get. Intraday traders like me are very heavily taxed already for small income. Include stt, and tax rate goes above 50% ⌠In contrast, some one can increase net worth in billions through capital gains and not pay a penny until they sell âŚ
1 Like
I want to take above example.
JUNE 15th : 50L
SEP 15th : 2 CR
DEC 15th : 5 CR
MARCH 31st : 8 CR
tax liability would be around 3.36 cr.
so the first installment would be 3.36 x 15% = 50.4 lacs and if I have paid only 2,04,750 INR as per above example. does income tax department would charge interest rate for that period?
Hi, yes you shall be charged an interest on the amounts because intraday trading will be considered as a business income and you need to pay advance tax considering the income of the entire year.
However, if it is your first year of business then you wonât be charged any interest if you pay as per the earned income.
1 Like
do we have to pay this interest at time of filing ITR?