Question 1

Who Must Pay Advance Tax

Accepted Answer

Advance tax is pay-as-you-earn for non-salaried income. Missing it costs 1% per month in interest. Most freelancers, investors, and business owners are unaware until they face a ₹20,000 to 80,000 interest bill at filing. Who is exempt: Senior citizens (60+ years) with NO business income are fully exempt from advance tax. Their entire liability is paid as self-assessment tax at filing. Important: senior citizen with rental income from property + business = NOT exempt. Salaried with only salary income: Employer deducts TDS monthly. If estimated TDS equals full liability, no advance tax needed. But if you have FD interest, MF dividends, or freelance income on the side, check if advance tax applies. Presumptive taxpayers (Sec 58, Income-tax Act 2025, old Sec 44AD/44ADA): Pay entire advance tax in ONE instalment by March 15. Skip quarterly, just one payment by March 15. LTCG/STCG, special rule: Capital gains arising after March 15, pay entire tax by March 31, no Sec 425 (old Sec 234C) interest. Capital gains arising in Q3? Pay tax in Q4 instalment, not retrospectively in Q3.

Question 2

Advance tax for freelancers: quarterly self-assessment and payment

Accepted Answer

Freelancers have no employer to deduct TDS. Your foreign clients pay you gross. You are entirely responsible for advance tax payment on a quarterly schedule. Schedule: Q1 (Jun 15), 15%. Q2 (Sep 15), 45%. Q3 (Dec 15), 75%. Q4 (Mar 15), 100%. If you miss or underpay: 1% per month simple interest under Sec 424, Income-tax Act 2025 (old Sec 234B; underpayment) and Sec 425 (old Sec 234C; quarterly shortfall). On ₹5L annual tax liability, missing Q2 means ₹22,500 in interest (45% of ₹5L = ₹2.25L unpaid × 1% × 10 months). Under Sec 58 (old Sec 44ADA) simplification: Sec 58 (old Sec 44ADA) filers pay advance tax in one shot on March 15 (100%), no quarterly requirement. This is a major simplification benefit of Sec 58 (old Sec 44ADA).

Question 3

Tax on inheritance: is there an estate or inheritance tax in India?

Accepted Answer

There is no estate duty or inheritance tax in India currently. The Estate Duty Act 1953 was repealed in 1985. Inheriting property, investments, or gold from a deceased person is not taxable in the hands of the heir, it is treated as a gift from a relative (exempt under Sec 92, Income-tax Act 2025 (old Sec 56(2)) proviso). However: if the inherited asset is later sold, capital gains tax applies, and the cost of acquisition is the cost to the original owner (for pre-April 2001 assets, use FMV on April 1, 2001). Inherited property that generates rent is taxable in the heir's hands from day of inheritance.

Question 4

Section 156 (now 289), Demand notice: pay or dispute within 30 days

Accepted Answer

156 is a demand notice, the IT department has assessed that you owe a specific amount of tax, interest, and/or penalty. This comes after a 143(3) (now Sec 270(10)) or 147 assessment order. You have two options within 30 days: (1) Pay the demand, if you agree it's correct. Pay on IT portal under "e-Pay Tax." Get a challan receipt. (2) File an appeal (CIT(A)), if you dispute the demand. On filing CIT(A), you can request a stay of demand (usually 20-25% of demand must be paid as a pre-condition for stay). If you miss 30 days: 1% per month interest under Sec 220(2) starts running. If you still don't pay, Sec 221 penalty can be levied up to the amount of the demand.

Advance tax due? Pay the right amount, on time.

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Advance tax due? Pay the right amount, on time.