Self Assessment Tax: How to Calculate and Pay Online?
Updated: Sep 25
There are crores of tax filers in India. After deducting any allowable expenses and setting off any applicable losses from the prior or current year, each individual must determine their whole tax obligation on their taxable income. Three methods are available to the government for the collection of such tax: Advance tax, Self-assessment tax, and Tax Deducted at Source ("TDS")/Tax Collected at Source ("TCS"). Self-assessment tax is the amount of unpaid taxes remaining at the conclusion of the fiscal year after deducting all allowed deductions and taxes paid. It is important to note that before filing an income tax return, a taxpayer must pay self-assessment tax. Every Indian citizen is required to abide by this regulation. The following guide explains how to calculate and pay self-assessment tax.
Table of Content
Introduction to Self-Assessment Tax
Definition and Objective
Self-assessment tax refers to the tax paid by the assessee after working out aggregate taxable income and ascertaining the liability of tax payable. This is usually payable before filing the ITR. It enables the clearing of dues outstanding, if any, and reflects the correct, final tax liability for the financial year. Self-assessment tax thus becomes necessary for proper maintenance of records of tax payment and to avoid penalty incurred on it.
Legal Framework
The self-assessment tax in India is governed by the Income Tax Act, 1961. The relevant sections include Section 140A, which makes it obligatory to pay the self-assessment tax before filing the ITR. This statutory provision is necessary in order to ensure that the taxpayer properly works out and pays the remaining tax due from him prior to the filing of returns.
When and Why Self-Assessment Tax is Required?
Scenarios Requiring Self-Assessment Tax
Self-assessment tax has to be paid in many scenarios which include:
When advance tax paid is less than the total tax liability
Where there is additional income not covered by TDS
Mismatches between the TDS and actual tax liability
Consequences of Non-Payment
Failure to pay the amount of self-assessment tax, would result in the following consequences:
Penalties: The Income Tax Department charges penalties for non-payment or late payment of taxes.
Interest: Interest is charged on late payment under Section 234A, 234B, and 234C.
Legal Action: Further continued non-payment may lead to prosecution, which could involve legal action.
Calculation of Self-Assessment Tax
Components of Self-Assessment Tax
For proper calculation of self-assessment tax, the following component shall be kept in mind:
Income from Various Sources: Income from salary, business, investments, or other sources.
Deductions and Exemptions: Deductions applicable under sections such as 80C and 80D and exemptions available on HRA, LTA, and so on.
Step-by-Step Calculation Process
Calculate Total Income: Aggregate all sources of income.
Apply Deductions and Exemptions: Deduct eligible deductions and exemptions.
Calculation of Tax Liability: Apply the net taxable income against relevant tax rates.
Subtract TDS and Advance Tax: Less TDS and advance taxes already paid.
Compute Remaining Tax: The balance is the self-assessment tax payable.
Example: Total income is INR 10,00,000 and, after deductions, the taxable income is INR 8,00,000, and so the liability may be INR 72,500. If INR 60,000 is already paid through TDS, the self-assessment tax would be INR 12,500.
Payment Procedure
Online Payment Methods
Visit the Official Income Tax Website: Go to https://www.incometax.gov.in/iec/foportal/.
Select e-Pay Tax Option: Reach the section for payment of advance tax/ self assessment tax after logging in.
Select New Payment: Click on the new payment option.
Choose Income Tax: Select ‘Income Tax’ from the list of options and click on ‘Proceed’.
Select the correct ‘Assessment Year’ and select ‘Self-Assessment Tax (300)’ from the dropdown menu and continue to the next step.
Enter the tax amounts here and continue to complete the payment.
Choose the Payment Mode: Choose the bank and payment mode (net banking, debit card, and so on)
Save the Receipt: Download and print the receipt for record.
Offline Payment Methods
Download Challan 280 Form: Available on the website of the Income Tax Department.
Fill in the Details: Fill in the required details like PAN, year of assessment, etc.
Go to an Authorized Bank: Take the filled form to an authorized bank branch.
Pay the Amount of Tax: Pay in cash or via cheque.
Take a Receipt: Ensure that the bank gives a stamped receipt for your record.
Filing Self-Assessment Tax
Filing through ITR Forms
At the time of filing ITR, mentioning the details of self-assessment tax paid as follows:
Select correct ITR Form: Depending on your source of income, mention the correct ITR Form (ITR-1, ITR-2, and so on)
Enter tax paid details: Enter self assessment tax paid under valid category
Attach payment receipt: Attach a copy of the payment receipt for verification.
Documents and Records
Proper record keeping is necessary:
Payment Receipts: Keeping all copies of payment receipts
Bank Statements: Representing the proof of tax payment.
Challan Details: Ensure to have the correct challan number and details.
Common Challenges and Solutions
Technical Issues in Online Payment
Following are the technical issues that may arise while making an online payment:
Troubleshooting: Check for stable internet connectivity and Clear browser cache.
Support: Contact the technical support of the bank or the helpdesk of the Income Tax Department.
Calculation Mistakes
Following are the common mistakes while calculating Self Assessment tax:
Double-check Entries: Cross check income sources and deduction amounts.
Use Online Calculators: The taxpayer should make use of online calculators available on the official website while calculating his tax liability.
The return may be deemed faulty if the assessee self-assesses income and the amount of taxes due incorrectly. Currently, taxpayers have 15 days after filing their returns to organise their information according to the Income Tax Act, 1961's rules. However, the submitted return will be deemed invalid if the assessee does not correct the inaccuracies.
Benefits of Timely Payment
Avoiding Penalties and Interest
Paying self-assessment tax on time helps avoid the following:
Penalties: No charges for penalty on non-payment.
Interest: Savings on interest charges under Sections 234A, 234B, and 234C.
Peace of Mind
Compliance with tax payments:
Reduces Stress: Makes one feel at peace by keeping away from legal hassles.
Builds Credibility: The taxpayer will have a clean financial record with the tax authorities.
Conclusion
In order to prevent significant tax obligations in the form of fines from being imposed on the taxpayer, self-assessment tax payment is an essential step in the ITR filing process and shouldn't be omitted. To reduce the difference in the amount of taxes owed, it is equally crucial to be truthful about the sources of your income.
FAQ
Q1. What is self-assessment tax, and why is it important?
Self-assessment tax refers to the tax paid by the assesses toward their assessed income, after accounting for advance tax and TDS. It is of importance in that it clears the remaining tax liability prior to filing the income tax return.
Q2. How to calculate self-assessment tax?
Calculation of self-assessment tax: The steps are aggregating total income from all sources, relevant deductions and exemptions, calculation of the tax amount to be paid based on applicable rates, and finally deducting the already paid TDS and advance tax.
Q3. What are the steps to pay self-assessment tax online?
Paying self-assessment tax online: After the uploading of the return, log on to the website of the Income Tax Department, choose e-Pay Tax, fill in all the details required, select payment method, and submit the confirmation. Keep the receipt for your record.
Q4. What information is required to pay self assessment tax online?
You need to provide your PAN, assessment year, address, email, phone number, type of payment (self-assessment tax), and the bank details for making the payment.
Q5. Can I pay self – assessment tax through net banking?
Yes. Self – assessment tax can be paid through Net Banking. The only point is that your bank should be approved for the payment of tax through banks.
Q6. What should I do if my online self-assessment tax payment fails?
In case, your payment has failed, then try again after checking internet connectivity and clearing browser cache. In case, the problem still persists, please contact your bank or the help-desk of Income Tax Department.
Q7. How do I confirm whether the payment of self-assessment tax made by me has been successful?
On completion of the payment, a Challan will be given with a Challan Identification Number (CIN). You can further check the payment status on the e-filing portal of the Income Tax Department.
Q8. Whether there is a last date for payment of self assessment tax?
Self-assessment tax should be paid on or before the filing of the income tax return for the relevant assessment year to avoid interest and penalty.
Q9. What happens if I don’t pay my self-assessment tax on time?
In case you do not pay self-assessment tax on time, then interest and penalties under Sections 234A, 234B, and 234C of the Income Tax Act can be levied and also attract prosecution.
Q10. Can I correct mistakes in my self-assessment tax payment?
Yes, if you make a mistake in your self-assessment tax payment, you can file a revised return to correct it. Ensure you recalculate the tax correctly and pay any additional tax due.
Q11. Can I pay my self-assessment tax offline?
Yes, you can pay your taxes at your bank branch over the counter or by RTGS or NEFT. You can obtain a Challan Form or Mandate Form for the challans that have already been generated and saved under the Generated Challans tab by using the Make payment offline feature.
Q12. How to pay my self-assessment tax offline?
Take the actions listed below:
Go to your local bank and ask for a Challan 280 form.
Complete the necessary information and turn it in at the bank counter with the payment.
The bank representative will provide you with a receipt once you make a payment. Hold onto this receipt as evidence of your payment.
The payment may not appear in your Annual Information System (AIS) for up to ten days. In your AIS, the payment should be identified as "Self-assessment tax."
Q13. What is the difference between self-assessment tax and advance tax?
Advance tax and self-assessment tax are commonly confused with one another. But they are not at all alike. If your tax burden after taking TDS exceeds Rs 10,000, you must pay advance tax in the year that you earn the income. On the other hand, before filing a tax return, the self-assessment tax must be paid in the assessment year, which is the year after.
Q14. Can I avoid penalties and interest by partially paying self-assessment tax?
Taxpayers who fail to pay the self-assessment tax in full or in part will be said to be in default, or "assess in default." The amount of the penalty will be determined by the income tax officer, although it cannot exceed the amount of taxes owed.
Q15. What is the due date to pay self-assessment tax?
There isn't a specific deadline to pay self-assessment taxes. However, you can receive a warning or notification from the income tax department if you don't pay it before filing your return. Penalties or interest can also be owed.
Q16. Can I make installment payments for self-assessment tax?
It is possible to pay SAT in installments. The government does not anticipate that you will pay the full sum at once. However, don't forget to submit the ITR before making the whole payment.
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