Self Assessment Tax

Self-assessment tax is a tax an individual pays on the excess income after deducting TDS and advance tax in a financial year. Simply put, self-assessment tax is the additional tax to be paid after accounting for TDS and advance tax. Those individuals whose income is above the threshold limit are liable to pay self-assessment tax in advance.

Here are some instances that require an individual to pay self-assessment tax even after paying TDS and advance tax:

• If you have missed out on including an income while paying the final advance tax.
• If the TDS at source is done at a lower rate or is not deducted at all.
• If an individual changes jobs and the new employer has not considered the salary from the previous employer.
• If an individual receives an unexpected income from other sources on which TDS is not deducted.

One can pay self-assessment tax by filling out the self-assessment tax challan 280. It is important to note that there is no deadline for paying self-assessment tax. However, individuals must pay the self-assessment tax before filing income tax returns to avoid paying interest.

Here are the steps to arrive at the amount for self-assessment tax in India:

• Add the income from all sources like salary, interest, profession, business profit, capital gains, etc.
• Reduce all the deductions and exemptions allowed under different sections, such as sections 80D, 80C, etc.
• Arrive at the tax according to the slab rates.

What is the Self-Assessment Tax Formula?

Where,

A= Total tax

B= Interest according to section 234A, 234B, 234C

C=Tax Relief under sections 90, 90A,91

D=MAT credit under section 115JAA

E= TDS/TCS amount

F=Advance tax

Also Read: All About Tax Deducted at Source

Are you thinking about how can I pay self-assessment tax? Then let us tell you that there are two methods to pay the tax: online and offline. Both the procedures are mentioned below.

Online Through Income Tax Portal

Individuals can pay self-assessment tax online through the Income Tax website in the following way.

• Login to the Income tax e-filing portal.
• Navigate to the “e-File tab” and select “e-pay tax” from the options.
• On the next screen, click look for the “New Payment” option on the right corner.
• Select “Income Tax” from the list of options on the page. Then click “Proceed.”
• From the dropdown menu, choose “Assessment Year” and then select “Self-assessment tax 300.” Continue to the next screen.
• Fill in the tax amounts on the page.
• Choose the bank through which you wish to make the transaction and complete the payment.

Also Read: Section 234C of the Income Tax Act

Offline Through Banks

• Visit your bank and collect the self-assessment tax challan 280.
• Fill out the specified information as required in the form accurately.
• Approach the designated tax payment counter in the bank and submit the challan along with the tax amount. You may pay the tax either in cash (up to ₹ 10,000) or by cheque.
• Collect the challan receipt from the bank and preserve it as proof of tax payment.

• Login to your account on the e-filing portal.
• Under the e-file tab, click on ‘e-Pay Tax.’
• On the following page, select ‘Payment History’. Search for the self-assessment tax challan you want to download.
• Under the Action tab, click on the three dots and click on the ‘download’ option. The challan will be downloaded and saved in your computer system.

• The Return is Considered ‘Defective ’- If an assesses makes a wrong calculation of the self-assessment tax, his return will be considered defective. However, the Income Tax provisions allow taxpayers to rectify their returns within 15 days of filing.

Advance tax and self-assessment tax are both paid to the government according to the provisions of the Income Tax Act 1961. Both these types of taxes are liabilities for the taxpayer. However, they differ from each other in the following ways:

Also Read: What is Advance Tax

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