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Self Assessment Tax : Rule and Calculation

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Hiral Vakil

Salary Income
Self Assessment Tax
Last updated on April 14th, 2021

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.

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.



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 :slight_smile:

    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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