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July 30, 2020

What is due date to pay tax for Senior Citizens for FY 2019-20 as per Income Tax Notification 29 July 2020?

by facelesscompliance in Compliance Law

What is due date to pay tax for Senior Citizens for FY 2019-20 as per Income Tax Notification 29 July 2020

As per the Lockdown guidelines issued by Ministry of Home Affairs, Senior Citizens above age 65 are required to stay at home, unless it’s urgent or emergency like hospital visits.

The Income tax department has time to to time extended due dates for Income Tax filing returns and also paying taxes because of many states still in lockdown and hardly 10% staff are working in professional offices and banks which makes difficult for senior citizens to comply the deadlines and due dates in income tax for payment of taxes and filing returns

In normal scenario as per income tax laws resident senior citizens are not required to pay any advance tax if income is from other than business activities, like interest, divided, pension etc. They can pay tax at the time or before filing of Income Tax Returns for which every year the due date is 31 July.

Considering this year as exceptional due to Covid19, the Income Tax Department has extended many due dates including date to file Income Tax Returns and Revise returns for last FY 2018-19 from 31 July to 30 September as per recent notification No dated 29 July 2020

Senior Citizen are most vulnerable segment as they are not use to pay advance tax and pays taxes only at the time of filing return before due date (as no int is applicable to them)

The Senior Citizens are use to pay taxes only at the time of filing Income Tax Returns. However considering Corona Virus and Lockdown Government has extended due dates to File Income Tax Returns for all Taxpayers to 30 November 2020. However Government is also in needs of funds so it has decided for large taxpayers having liability of more than 1 Lakh to pay Taxes by 31 July 2020, after that interest on tax will be applicable as per provision of Income Tax

According to Section 207 of the Act, a resident senior citizen (an individual of age 60 years or more) who does not have any income from business or profession is not liable to pay advance tax. For instance, a senior citizen may have various sources of income such as rental income, pension, interest from bank deposits, or dividends. She does not have to pay advance tax, as these sources of income do not fall under the income tax head of “income from business or profession”. Such an exemption is irrespective of the amount of income that a senior citizen earns from a source other than business or profession.

However in case the total self-assessment tax liability of senior citizen is more than Rs. 1,00,000 than the due date for paying self-assessment tax is on or before 31st July 2020 and not 30th November 2020.

What Income Tax Notification 29 July 2020 says for Senior Citizen?

The CBDT has issued following Notifcation

For Assessment Year 2020-21 Financial Year 2019-20, resident Senior citizen not required to pay advance tax under section 207, any self assessment tax paid by pre extended due date ( 31 July 2020 ) to be treated as advance tax. Thus after this payment if tax remaining to be paid is less than 1 lakh, no interest under 234A

Without this correction, senior citizen not required to pay advance tax and having self assessment tax of more than 1 Lakh would have had to file tax return by 31 July to avoid interest under section 234A

What is Interest for delay in filing of Income tax return (Section 234A):

Section 234A, is levied for delay in filing the return of income. Interest is levied at the rate of 1% per month or part of the month simple interest basis. In other words, the taxpayer is liable to pay simple interest at 1% per month or part of a month after 31st July 2020 in case the self-assessed tax liability is more than Rs. 1 lakh. Interest shall be calculated from the 1st August 2020 till the actual date of payment.

To correct above and to provide relief to Senior Citizen CBDT has issued Income Tax Notification 29 July 2020

To illustrate if Mr A is Senior Citizen covered under 207. Mr A have to pay tax of 3 lakh for FY 2019-20 and he pay 2.5 lakh by 31 July. Taking into account circular 2/2015 of 29 July 2020, Interest under section 234A would be levied on 50000. However now since Self Assessment Tax pending after his original due date (31July 2020) is less than one lakh no interest will be applicable as per 234A

Understand with more Examples

TaxpayerTotal tax liability (A)Total TDS and Advance tax paid (B)Self-assessment tax payable (A-B)Self Assessment Paid  Tax onIncome Tax Return FiledIs Interest u/s 234A applicable
Senior citizen having income from interest pension etc3,00,0001,50,0001,50,000Rs 1,50,000 before 31 July 2020On or before 30 NovemberNo
Senior citizen having income from interest pension etc3,00,0001,50,0001,50,000Rs 51,000 before 31 July 2020 Balance Rs 99,000 before 30 NovOn or before 30 NovemberNo
Senior citizen having income from interest pension etc3,00,0001,50,0001,50,000Rs 49,000 before 31 July 2020 Balance Rs 1,01,000 on 30 Nov30 NovemberYes From 1 Aug to 30 Nov
Senior citizen having income from interest pension etc3,00,0001,50,0001,50,000Rs 49,000 before 31 July 2020 Balance Rs 1,01,000 before 31 Aug Nov31 AugYes For month of  Aug
Senior citizen having income from interest pension etc3,00,0002,00,0001,00,000Rs 1,00,000 before 30 NovOn or before 30 NovemberNo
Senior citizen having income from interest pension etc3,00,0002,50,00050,000Rs 50,000 before 30 NovOn or before 30 NovemberNo
Senior citizen having income from interest pension etc90,000090,000Rs 90,000 before 30 NovOn or before 30 NovemberNo

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