Self Assessment Tax : Rule and Calculation

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Hiral Vakil

Salary Income
Self Assessment Tax

What is Self Assessment Tax?

The meaning of self assessment tax is any pending tax liability at the end of the financial year after calculating total taxable income and subtracting deductions & taxes paid. A taxpayer must pay self assessment tax before he/she can file an ITR in India. Taxpayers can pay this tax from the TIN-NSDL portal.

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Who has to pay the Self Assessment tax?

Every taxpayer whose tax liability for a financial year exceeds taxes paid including TDS and Advance Tax has to pay this tax.

Advance Tax: Rules, Calculations and Due Dates
Advance Tax is a part payment of your tax liability before the end of the financial year
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Advance Tax: Rules, Calculations and Due Dates
Advance Tax is a part payment of your tax liability before the end of the financial year
Read More

Self Assessment Tax in case of salaried individuals

In the case of a salaried person, the employer calculates the tax on salary. An employer is responsible to deduct tax (TDS) from your salary income and deposit the same to Government. There is no tax liability for salaried individuals if the calculation of the tax liability is correct and if they pay TDS on time.

However, it is very common to have a tax liability for salaried individuals in the following situations

How to calculate the tax?

The tax liability can be calculated using this formula:

self-assessment tax formula

FAQs

How to pay self-assessment tax?

​There are two ways to do so:

– Deposit in a bank with tax challan or
– Online payment using Net banking facility

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

​If you don’t pay this tax, you will not be able to file your Income Tax Return. Moreover, after the payment of this tax, you also need to provide counterfoil information in your return.

What is the difference between self-assessment tax and advance tax?

The Advance Tax is part payment of your tax liability before the end of the Financial Year. 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.

Self Assessment Tax 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.



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