My client is 71, resident, retired, and lives on pension, interest and capital gains. The CPC intimation charges her interest under s.234B and s.234C. Is she liable to advance tax at all?
No. Section 207(2) says in terms that the provisions of sub-section (1) shall not apply to an individual resident in India who (a) does not have any income chargeable under the head 'Profits and gains of business or profession' and (b) is of the age of sixty years or more at any time during the previous year. Once s.207(1) does not apply, there is no advance tax liability to default on, and s.234B and s.234C — which both operate on an assessee liable to pay advance tax under s.208 — have nothing to attach to.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2012-04-01, reported as Income-tax Act, 1961, s.207(2), inserted by the Finance Act, 2012, s.82, operative from 1 April 2012 by force of s.1(2) of that Act. It bears on section 207, section 207(2), section 208, section 234B, section 234C, section 44AD, section 44ADA of the Income Tax Act 1961, in Assessment & Scrutiny, Demand, Recovery & Stay and Capital Gains Exemptions matters.
This is the most frequently missed relief in the whole advance tax chapter, and it is missed in both directions. Practitioners forget to take it, and the CPC's processing does not always apply it, so a senior citizen with a large one-off capital gain is routinely charged s.234B and s.234C interest that the statute does not authorise. Three limits on it have to be respected. First, it is only for an individual resident in India — a non-resident senior citizen gets nothing from it, and nor does a HUF, firm or company however old its members. Second, it is lost entirely if there is any income chargeable under the head 'Profits and gains of business or profession' — the disqualification is the existence of business or professional income, not its size, so a small consultancy receipt or a partner's remuneration taxable under that head takes the assessee out of the exemption for the whole year. Income under other heads does not matter: pension taxed as salary, interest and other income, house property income and capital gains, however large, are all consistent with the exemption. Third, the age test is satisfied if the assessee attains sixty at any time during the previous year, so a person turning sixty on 31 March qualifies for that whole previous year. Note that the exemption is from the liability to pay advance tax, not from tax: self-assessment tax under s.140A remains payable, and s.234A interest for late filing is a separate charge that this sub-section does not touch.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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Section 207(2) of the Income-tax Act, 1961, as printed on the departmental section pages, reads: '(2) The provisions of sub-section (1) shall not apply to an individual resident in India, who— (a) does not have any income chargeable under the head "Profits and gains of business or profession"; and (b) is of the age of sixty years or more at any time during the previous year.' Sub-section (1) is the charging provision that makes tax payable in advance during any financial year in respect of the current income. The sub-section was inserted, and the original section renumbered as sub-section (1), by s.82 of the Finance Act, 2012.
Section 207(1) does not apply at all to an individual resident in India who has no income chargeable under the head 'Profits and gains of business or profession' and who is sixty years of age or more at any time during the previous year. The two conditions are cumulative — the sub-section joins them with 'and' — and both are tested by reference to the previous year, the age condition being satisfied if the age of sixty is attained at any time during it.
Not applicable — this is a statement of the statutory text as printed on the departmental section pages and as inserted by the Finance Act, 2012. No judicial reasoning is involved.
The provisions of sub-section (1) shall not apply to an individual resident in India, who— (a) does not have any income chargeable under the head "Profits and gains of business or profession"; and (b) is of the age of sixty years or more at any time during the previous year.
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Handle my notice → Ask a CA on WhatsAppNo. Section 207(2) says in terms that the provisions of sub-section (1) shall not apply to an individual resident in India who (a) does not have any income chargeable under the head 'Profits and gains of business or profession' and (b) is of the age of sixty years or more at any time during the previous year. Once s.207(1) does not apply, there is no advance tax liability to default on, and s.234B and s.234C — which both operate on an assessee liable to pay advance tax under s.208 — have nothing to attach to. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 207, section 207(2), section 208, section 234B, section 234C, section 44AD, section 44ADA of the Income Tax Act 1961. It is reported as Income-tax Act, 1961, s.207(2), inserted by the Finance Act, 2012, s.82, operative from 1 April 2012 by force of s.1(2) of that Act. This is the most frequently missed relief in the whole advance tax chapter, and it is missed in both directions. Practitioners forget to take it, and the CPC's processing does not always apply it, so a senior citizen with a large one-off capital gain is routinely charged s.234B and s.234C interest that the statute does not authorise. Three limits on it have to be respected. First, it is only for an individual resident in India — a non-resident senior citizen gets nothing from it, and nor does a HUF, firm or company however old its members. Second, it is lost entirely if there is any income chargeable under the head 'Profits and gains of business or profession' — the disqualification is the existence of business or professional income, not its size, so a small consultancy receipt or a partner's remuneration taxable under that head takes the assessee out of the exemption for the whole year. Income under other heads does not matter: pension taxed as salary, interest and other income, house property income and capital gains, however large, are all consistent with the exemption. Third, the age test is satisfied if the assessee attains sixty at any time during the previous year, so a person turning sixty on 31 March qualifies for that whole previous year. Note that the exemption is from the liability to pay advance tax, not from tax: self-assessment tax under s.140A remains payable, and s.234A interest for late filing is a separate charge that this sub-section does not touch. If it applies to you, the first step is this: Check the three conditions on the face of the return: residential status (resident), age (sixty at any time during the previous year, so use the date of birth, not the age on 31 March), and the absence of any income under the head 'Profits and gains of business or profession'.
Section 207(2) of the Income-tax Act, 1961, as printed on the departmental section pages, reads: '(2) The provisions of sub-section (1) shall not apply to an individual resident in India, who— (a) does not have any income chargeable under the head "Profits and gains of business or profession"; and (b) is of the age of sixty years or more at any time during the previous year.' Sub-section (1) is the charging provision that makes tax payable in advance during any financial year in respect of the current income. The sub-section was inserted, and the original section renumbered as sub-section (1), by s.82 of the Finance Act, 2012. The matter was decided on 2012-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. Section 207(1) does not apply at all to an individual resident in India who has no income chargeable under the head 'Profits and gains of business or profession' and who is sixty years of age or more at any time during the previous year. The two conditions are cumulative — the sub-section joins them with 'and' — and both are tested by reference to the previous year, the age condition being satisfied if the age of sixty is attained at any time during it.
Not applicable — this is a statement of the statutory text as printed on the departmental section pages and as inserted by the Finance Act, 2012. No judicial reasoning is involved. In the words reproduced by the source cited on this page: "The provisions of sub-section (1) shall not apply to an individual resident in India, who— (a) does not have any income chargeable under the head "Profits and gains of business or profession"; and (b) is of the age of sixty years or more at any time during the previous year."
It was decided by the CBDT Circulars & Instructions on 2012-04-01 and is reported as Income-tax Act, 1961, s.207(2), inserted by the Finance Act, 2012, s.82, operative from 1 April 2012 by force of s.1(2) of that Act. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 207, section 207(2), section 208, section 234B, section 234C, section 44AD, section 44ADA, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. Section 207(1) does not apply at all to an individual resident in India who has no income chargeable under the head 'Profits and gains of business or profession' and who is sixty years of age or more at any time during the previous year. The two conditions are cumulative — the sub-section joins them with 'and' — and both are tested by reference to the previous year, the age condition being satisfied if the age of sixty is attained at any time during it. It arises in Assessment & Scrutiny, Demand, Recovery & Stay and Capital Gains Exemptions matters, on section 207, section 207(2), section 208, section 234B, section 234C, section 44AD, section 44ADA of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. If they are satisfied, dispute the s.234B and s.234C charge at its root: the assessee is not a person liable to pay advance tax under s.208 because s.207(1) itself does not apply to her. Where a CPC intimation under s.143(1) has levied the interest anyway, take it by rectification under s.154 — it is an arithmetical consequence of a statutory disapplication and does not require any finding of fact beyond age, residence and heads of income. Watch for anything that creates business-head income: presumptive income returned under s.44AD or s.44ADA, a partner's interest and remuneration from a firm, or speculative and F&O income. Any of these destroys the exemption for that year. Do not extend the point to s.234A. Section 207(2) removes the advance tax liability only; interest for late filing of the return continues to run on the tax payable.
Still good law. The sub-section is printed identically on departmental pages of two different vintages (Year: 2025 and Year: 2024 (No. 1)) and matches word for word the text inserted by s.82 of the Finance Act, 2012. No later amending Act touching s.207 was located this pass, and no judicial decision on the sub-section was retrieved, so validity was not checked against case law. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Sub-section (2) was transcribed in full this pass from https://incometaxindia.gov.in/w/section-207-64 (heading 'Liability for payment of advance tax', Act 'Income-tax Act, 1961', Year: 2025) and independently, word for word, from https://incometaxindia.gov.in/w/section-207-62 (Year: 2024 (No. 1)). Its provenance and commencement were established from a second, independent route: s.82 of the Finance Act, 2012, read at https://indiankanoon.org/doc/37047129/, which reads 'Section 207 of the Income-tax Act shall be renumbered as sub-section (1) thereof and after sub-section (1) as so renumbered, the following sub-section shall be inserted' and then sets out sub-section (2) in the same words the departmental pages print. That section carries no separate commencement clause, and s.1(2) of the Finance Act, 2012, read at https://indiankanoon.org/doc/92169569/, provides: 'Save as otherwise provided in this Act, sections 2 to 118 shall be deemed to have come into force on the 1st day of April, 2012.' Section 82 falls within that range, so the exemption operates from the financial year 2012-13 onwards. I did not find a departmental footnote confirming the date and I did not read the Finance Act, 2012 as printed in the Gazette; the commencement above is drawn from the Act's own s.1(2) as reproduced on indiankanoon. No judicial decision on s.207(2) was retrieved this pass. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Section 207(1) does not apply at all to an individual resident in India who has no income chargeable under the head 'Profits and gains of business or profession' and who is sixty years of age or more at any time during the previous year. The two conditions are cumulative — the sub-section joins them with 'and' — and both are tested by reference to the previous year, the age condition being satisfied if the age of sixty is attained at any time during it.
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