Difference between Advance Tax and Self Assessment Tax

There are different types of tax payments which are given below. In this article, we will be taking a close look at the difference between the Advance Tax and Self Assessment Tax.

It is important to know the purpose of each Advance Tax payment and Self Assessment Tax payment because you have to select a particular type at the time of paying taxes.

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Advance Tax

Advance Tax is part payment of your tax liability before the end of the financial year. It is based on the principle of “pay as you earn”. As per the income tax act, every assessee whose tax liability for a financial year exceeds INR 10,000 is required to pay advance tax on an installment basis. There is an interest penalty in case the Advance tax is not paid before the end of the financial year.

While paying Advance tax through challan 280, you have to select (100) ADVANCE TAX as a type of payment.

Example

Prashant runs a small trading business. His expected annual profits for FY 2016-17 from trading is INR 10,00,000. Accordingly, his approximate tax liability will be INR 1,29,000. Since his total tax liability exceeds INR 10,000, he is required to pay advance tax on an installment basis. Prashant will have to pay advance tax before 31st March 2017 to avoid the interest penalty.

Advance Tax Filing (Quarterly)
CA Assisted Advance Tax calculation and payment for Individuals and businesses with tax payable more than INR 10,000 after TDS deducted
[Rated 4.8 stars by customers like you]
Advance Tax Filing (Quarterly)
CA Assisted Advance Tax calculation and payment for Individuals and businesses with tax payable more than INR 10,000 after TDS deducted
[Rated 4.8 stars by customers like you]

Self Assessment Tax

It is what the assessee pays after the end of the financial year. Before filing the income tax return, every assessee is required to calculate the tax liability. If there are any outstanding tax dues to be paid then it is to be paid first before filing Income Tax Return.

While paying Advance tax through challan 280, you have to select (300) self-assessment tax as a type of payment.

Example

Esha is a housewife and she also teaches school kids in her spare time. She earned approximately INR 3,50,000 In FY 2016-17 from tutoring. While filing her tax return, she calculated her tax liability at INR 5000. Esha has to pay this self-assessment tax of INR 5000 before filing her tax return.

Advance Tax Filing (Annual)
CA Assisted Advance Tax calculation and payment for Individuals and businesses with tax payable more than INR 10,000 after TDS deducted
[Rated 4.8 stars by customers like you]
Advance Tax Filing (Annual)
CA Assisted Advance Tax calculation and payment for Individuals and businesses with tax payable more than INR 10,000 after TDS deducted
[Rated 4.8 stars by customers like you]

FAQs

What if I don’t pay a self-assessment tax?

If you don’t pay self-assessment tax, you will not be able to file your Income Tax Return. Once you pay your self-assessment tax, you also need to provide counterfoil information in your return.

How to pay self-assessment tax?

There are two ways to pay self-assessment tax:
– Deposit in a bank with self-assessment tax challan or
– Online payment using Net banking facility

Do salaried people have to pay advance tax?

In the case of salaried individuals, TDS is deducted from their salary and deposited to the government by their employer. So as far as salary income is concerned, they are not required to pay advance tax. However, for all the incomes other than salary, if the total of such incomes exceeds INR 50,000 then they will have to assess the tax liability on the same and pay advance tax.

How do I determine whether I am liable to pay advance tax or not?

Before every due date for payment of advance tax, you will have to calculate your expected annual income and determine the tax liability on the same. If your total tax liability exceeds INR 10,000 then you are liable to pay advance tax as per the schedule has given above.

What if I don’t pay advance tax on time?

As mentioned above, if you fail to pay advance tax or make a late payment of advance tax, you will have to pay penal interest. Under section 234B, interest for default in payment of advance tax is levied at 1% simple interest per month or part of a month

Got Questions? Ask Away!

  1. Hey @TeamQuicko

    I have LTCG of more than 7 lakhs from the equity for this year. Is there a way to reduce my tax liability? Also, do I have to pay the tax in advance? If I fail to do so, what will be the penalty/interest percentage I have to pay during my tax filing in 2020?

  2. Hi @vivek25,

    You are liable to pay advance tax if your total outstanding tax liability for the financial year after TDS is above INR 10,000.

    To calculate your advance tax liability you need to add your estimated income for the financial year from all sources including - Salary, House Property, Capital Gains, Business & Profession and other sources.
    Next, subtract all eligible deductions, expenses, and Tax Credit available to you.
    Now, if your outstanding tax liability is above INR 10,000, you need to pay advance tax to avoid penalty u/s 234B and 234C.

    Hope this answers your query

    You can also use the advance tax calculator to know your advance tax liability under the old and new tax regime

  3. Hi
    When I pay the advance tax through the ZERODHA-QUICKO platform, does it get saved/stored? For example I have paid for Q1. so when I have to pay for Q2, will this be automatically calculated?
    Thanks

  4. I have paid the Advance tax of Q1, but didn’t received any email from income tax portal! So, Is that normal? I received the Challan No. receipt, but no email from IT portal!

  5. Hey @Gaurav,

    Once you pay the Advance Tax, you have an option to download the challan. In case you missed downloading it, the tax credit for the same will be reflected in your Form 26AS.

  6. Hey Girimon_Vasudevan,

    When you pay advance tax through our tax planner app, you should download the challan and then you
    need to add the it the advance tax toggle under the tax credits in the tax planner tab to see your tax credits reflected in the appropriate quarter.

  7. @Nireka
    Thanks. I have done it for the current year.
    I did not do it for the last year. How can I add it now?

  8. Hi @Girimon_Vasudevan,

    If you missed paying advance tax last year, then the interest penalty may be applicable u/s 234B & 234C.
    You can pay that as along with your self-assessment tax the filing your Income Tax Return

  9. Sorry, I didn’t miss the payment. I missed to add it in the tax credit on your portal. I am unable to add it now.

  10. @Girimon_Vasudevan, once you login to the Tax Planner navigate to Tax Planner > Income Situation > Tax Credits to add the tax credits.

    If you face any issue can write to us at help@quicko.com and our team will be happy to assist you.

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