Whether tax is paid on capital gains

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 July 2012 If I sell a capital asset in January 2012 and have capital gains whether the estimated gains to be included in the calculation of advance tax as on September 30,2011?

CS, Deepak Pratap Singh

CS, Deepak Pratap Singh (Expert)
Follow

11 July 2012 Dear Friend, advance tax to be paid to the government on estimated income for the year under consideration. If you have considered that there will be capital gain, then calculate your advance tax liability considering capital gain. Thanks

Message likes : 1 times

Querist : Anonymous

Querist : Anonymous (Querist)

12 July 2012 Thanks Deepak for your inputs. You are right that if I anticipate the gain I have to pay the advance tax.
But for captal gains whether "Pay as you earn" is applicable?
Please refer the case of Smt. Premlata Jalani vs Assistant Commissioner Of Income Tax and say whether my understanding for the same is right or not?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
Follow

03 August 2025 Here’s a clear explanation about **advance tax on capital gains** and your query related to “Pay As You Earn” and the **Premlata Jalani case**:

---

### 1. **Is advance tax payable on capital gains?**

* Yes, **advance tax is payable on estimated capital gains** for the financial year.
* You need to estimate your total income, including expected capital gains, and pay advance tax in installments as per due dates.
* If you expect to earn capital gains in the year (even if sale happens later), you should consider it in your advance tax calculation.

---

### 2. **What about “Pay As You Earn” on capital gains?**

* **“Pay As You Earn”** (TDS on salary) is a concept mainly for salaried income.
* Capital gains are generally **not subject to TDS under the Pay As You Earn scheme**, except in some specific cases where TDS on capital gains is applicable (like on sale of immovable property under Section 194-IA, or securities under Section 194A etc).
* But **you need to pay advance tax yourself** on capital gains, as there is no regular TDS deducted on capital gains (except in specific cases).

---

### 3. **About the case: Smt. Premlata Jalani vs Assistant Commissioner of Income Tax**

* This case dealt with whether capital gains can be included in advance tax calculations.
* The court held that **capital gains, being part of total income, must be considered while computing advance tax liability.**
* The ruling supports that **taxpayers must estimate capital gains income and pay advance tax accordingly**, even if the actual transaction is not yet completed by September 30.
* Your understanding that advance tax on capital gains must be paid if you anticipate gains is **correct and upheld by this case**.

---

### **Summary**

| Question | Answer |
| ------------------------------------------------ | -------------------------------------------------------- |
| Is advance tax payable on capital gains? | Yes, if gains are anticipated in the year |
| Is Pay As You Earn applicable for capital gains? | No, except TDS on certain capital gains transactions |
| What did Premlata Jalani case say? | Capital gains must be included in advance tax estimation |

---

If you want, I can help you calculate your advance tax or draft an estimate for your capital gains advance tax payments!

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now