What is Self-Assessment Tax?

Every individual who earns income is required to pay Income Tax to the Government of India. However, failure to pay the full amount of taxes owed can lead to complications. One aspect of tax filing is the Self-assessment tax, which must be paid to ensure successful e-filing. 

Taxpayers contribute to the government's revenue through various means, including Advance Tax, TDS (Tax Deducted at Source), and Self-assessment tax. 

Self-assessment tax refers to any remaining tax that an individual needs to pay on their assessed income after considering TDS and advance tax before filing their income tax return. The income tax return cannot be submitted until the taxes have been settled. 

Towards the end of the year, if there is any outstanding tax liability before filing the ITR (Income Tax Return), a final amount needs to be calculated. 

This amount is referred to as Self-Assessment Tax or SAT. In simple terms, Self-Assessment Tax is the remaining tax that an individual pays on their assessed income, taking into account TDS and advance tax, before filing their income tax return.

Why Should Self-Assessment Tax be Paid?

Self-Assessment Tax refers to the tax paid by individuals on income from sources other than regular employment. If a taxpayer overlooks some income when making the final payment, it can result in lower or missing TDS deductions. 

While there is no specific due date for payment, this tax is always paid at the end of the relevant financial year. Timely payment helps avoid interest charges on the tax amount. It is crucial to pay this tax before filing the Income Tax Returns within the same assessment year. 

Although there isn't a fixed date for payment, it can be done by submitting a tax challan ITNS 280 either online or at a bank.

Computation of Self-Assessment Tax

When calculating interest on tax payments made before the assessment date, the following steps can be followed:

Determine the amount of advance tax that has not been paid. This unpaid amount will be used to calculate the interest until the payment of the Self-Assessment Tax (SAT).

Subtract the SAT amount from the advance tax amount. This difference will be considered for interest computation starting when the SAT payment is made.

Below are the steps to follow:

• Refer to the available online income tax slabs.

• Calculate the taxable amount payable based on your total income.

• Add the interest payable under Sections 234A, 234B, and 234C.

• Deduct any relief amount under Sections 90 and 90A from the total amount.

• Subtract the Minimum Alternate Tax (MAT) credit amount under Section 115JAA.

• Subtract the advance tax amount.

• The resulting amount will be the self-assessment tax payable on your income tax.

• These steps help ensure accurate calculation of interest and determine the final self-assessment tax liability.

How to pay self-Assessment tax?

To pay the Self-Assessment Tax online through net banking, you can follow these steps:

• Visit the income tax website at www.incometaxindia.gov.in. 

• Sign in to your account and click on the e-Pay taxes option.

• You will come to the National Securities Depository Ltd portal

• Select the 'Challan no./ITNS 280' tab and then choose the '(0021) Income tax (other than companies)' option.

• Fill in your details, including your PAN card, name, and contact information.

• Choose the applicable assessment year for which you are making the payment.

• Select the 'type of payment' as 'Self Assessment Tax' (300) and select your bank proceed with the payment option.

• Enter the tax payable amount.

• You will be redirected to your bank's net banking page to complete the payment.

• Make the payment as instructed by your bank.

• Verify the displayed challan for important details such as CIN, payment information, and the name of the bank.

• Save a soft copy or print a hard copy of the challan if necessary.

• The payment should reflect on your Form 26AS within a few days. If it doesn't appear, you can enter the challan details while filing your income tax return (ITR).

Form 26AS

If there is any remaining tax liability even after considering TDS and advance tax, it can be settled through self-assessment tax. The self-assessment tax payment period begins on April 1st of the assessment year. To keep track of tax payments, Form 26AS proves to be beneficial. It serves as a tax passbook, allowing taxpayers to verify the availability of their paid taxes. 

This form helps in claiming credits while filing the income tax return. In case of any discrepancies, it is essential for taxpayers to ensure that their details are accurately mentioned in the TDS returns or that they have correctly filled in the tax challan.

FAQs

• Can Self-Assessment Tax be adjusted against future tax liabilities? 

No, Self-Assessment Tax cannot be adjusted against future tax liabilities. It is specifically meant to settle the remaining tax liability for the assessment year it is paid in.

• Can Self-Assessment Tax be paid online? 

Yes, Self-Assessment Tax can be paid online through the income tax department's official website. Taxpayers can use net banking facilities to make payments securely and conveniently.

• When is Self-Assessment Tax paid? 

Self-Assessment Tax is typically paid during the assessment year, which starts from April 1st. It should be paid before filing the income tax return to ensure compliance with tax regulations.

• Can Self-Assessment Tax be adjusted against future tax liabilities? 

No, Self-Assessment Tax cannot be adjusted against future tax liabilities. It is specifically meant to settle the remaining tax liability for the assessment year it is paid in.

• How is Self-Assessment Tax calculated? 

To calculate Self-Assessment Tax, individuals need to determine their taxable income, apply the applicable tax rates, and deduct any TDS and advance tax already paid. The resulting amount represents the self-assessment tax liability.