In India, around 7.5 crore returns are filed annually. However, only 30% of individuals filing returns actually pay income tax, indicating that merely 1.6% of the country’s population is contributing to tax payments. The tax authorities collect tax through methods such as TDS, Advance Tax, and Self Assessment Tax. Moreover, Self assessment tax is a mechanism through which taxpayers evaluate their own income, calculate the tax liability, and pay any remaining taxes owed to the government
What is Self Assessment Tax?
Self assessment tax means an amount paid by an assessee on their net taxable income after deducting Advance tax and TDS for the respective financial year. Taxpayers should pay their taxes in order to finish the return filing process. In case the necessary sum is unpaid, the return filing process is ruled invalid, and you may face unfavorable consequences like interest and penalty, etc.
There is no due date for the payment of this tax. However, it is always a good practice to pay the tax and proceed with ITR Filing.
Who has to pay Self Assessment tax?
It is applicable to those taxpayers who fall under any of the below cases:
- The shortfall in payment of advance tax
- TDS was not deducted or deducted at a lesser rate as compared to the actual rate applicable
- If a salaried individual changed jobs and the employer did not take into account the salary from the previous employer while calculating TDS
- In the case of salaried individuals, other sources of income such as fixed deposit and mutual funds where tax is not paid and has not been disclosed to the employer
For example, let’s say Shreya makes 4 lakh rupees from her salary. In addition to her salary income, she also has an interest income of INR 1,20,000, which she did not disclose to the employer.
|Total Taxable Income||5,20,000|
|Total Tax Payable (as per the old regime slab rate)||16,500|
Note: Since Shreya’s total income exceeds INR 5 lakh, she is not qualified for a rebate under Section 87A.
How to calculate and pay self assessment tax?
Let’s understand the calculation using the below formula:
|Total income of the taxpayer||XX|
|Tax on total income||(a)|
|Less: Advance Tax||(b)|
|Less: Tax Rebate/relief||(d)|
|Tax payable (a – (b+c+d) )||XX|
|Add : Interest Payable (u/s 234A, 234B 234C)||XX|
|Self Assessment Tax||XX|
Self Assessment Tax Payment
The taxpayer can pay income tax via any of the below methods:
- Online via IT portal
- Offline by visiting a bank
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 has to pay advance tax on an installment basis. There will be an interest liability in case the Advance tax is not paid before the end of the financial year.
Self Assessment Tax is the requisite amount that an assessee needs to pay on their net taxable income after the end of the financial year. If any outstanding tax dues are to be paid, then it is to be paid before filing an Income Tax Return.
There is no due date for payment of tax. However, if you fail to pay this tax, you will receive a notice or intimation from ITD along with interest or penalty.
The tax payment is reflected in the IT portal and AIS.
IT Portal: Log in to the IT portal. Go to ‘My Account’ and click on ‘View Form 26AS’. You will be able to view all types of tax credits there.
AIS: Log in to the IT portal. Go to ‘Services’ and click on ‘AIS’. Select the relevant AY to view the tax credits.
Employers deduct TDS from the salary of salaried individuals and deposit it to the government. Therefore, salaried individuals are not required to pay self-assessment tax as far as salary income is concerned.
It is recommended to pay taxes at the time of return filing. However, if you make payments after filing the return, you may be considered a taxpayer in default, and you may incur liability to pay interest on the tax payable.