Self assessment tax in income tax is done when an individual pays their taxes and fills in the details to the best of their knowledge. Read on to know more about self-assessment tax.
Why Should Self Assessment Tax be Paid?
Self Assessment Tax is paid by individuals based on income from various sources. If any income is missed during the final payment, TDS deductions might be insufficient. The tax is paid at the end of a specific year, and paying it promptly avoids interest charges. This tax must be paid in the same assessment year before filing Income Tax Returns, using tax challan ITNS 280 either online or at a bank.
Computation
Interest calculation for tax payments made before the assessment date:
- The outstanding amount of advance tax is considered for interest calculation until the payment of Self Assessment Tax (SAT).
- The SAT payment is deducted from the advance tax amount for computation starting from the SAT payment date.
- Refer to the online income tax slabs.
- Calculate the taxable amount for your total income.
- Add the interest payable under Sections 234A, 234B, and 234C.
- Deduct the relief amount under Sections 90 and 90A from the total amount.
- Subtract the MAT credit amount under Section 115JAA.
- Subtract the advance tax amount.
- The remaining amount is the self assessment tax payable on your income tax.
Calculation of Self Assessment Tax
The Self Assessment Tax (SAT) can be calculated using the following formula:
where,
B represents the total amount of tax payable.
C represents the interest payable under section 234A/234B/234C.
D represents the relief on the tax payable under Section 90/90A/91.
E represents the MAT Credit under Section 115JAA.
F represents the amount of TDS/TCS.
G represents the Advance Tax.
Please note that interest under Section 234A is included only for late filing of income tax returns, while interest under Section 234B/234C is applicable for late payment of Advance Tax.
How to Download the Self-assessment Tax Challan
- Step 1: Go to the Income Tax e-filing portal and log into your account.
- Step 2: Click on the ‘e-File’ tab, then select ‘e-Pay Tax.’
- Step 3: Under ‘Payment History,’ locate the self-assessment challan you need. Click on the three dots under the ‘Action’ tab and select ‘Download’ to save it.
All About Form 26AS
If there is any remaining tax liability even after considering TDS and advance tax, it can be paid through self assessment tax starting from 01 April of the assessment year. Form 26AS, a tax passbook, is useful for taxpayers to verify their paid taxes. By claiming the credit at the time of filing the income tax return, discrepancies can be addressed. It is important for taxpayers to ensure accurate details in TDS returns and proper filing of information in the tax challan to avoid any mismatches.
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Difference between Self Assessment Tax and Advance Tax
Self Assessment Tax (SAT) and Advance Tax are both monetary obligations fulfilled to the Income Tax Department of India as stipulated by the Income Tax Act of 1961. Although they are both payments made to the Government of India in the form of taxes, they possess unique characteristics setting them apart from one another.
|
Basis of Comparison |
Advance Tax |
Self Assessment Tax |
| Definition | Advance Tax is a portion of the annual tax obligation that is paid beforehand by a taxpayer. | The tax payment made by an assessee on their assessed income, after subtracting TDS (Tax Deducted at Source) and Advance Tax, is known as the SAT. |
| Due date | The deadline for paying Advance Tax is determined by the payable tax amount. | There is no specific due date for the payment of Self Assessment Tax (SAT). However, it must be submitted prior to the deadline for filing the income tax return. |
| Who can pay | Both individuals who receive a salary and those who are self-employed are required to pay Advance Tax if their tax liability exceeds ₹ 10,000 in a given financial year. | SAT refers to the tax amount that an individual is obligated to pay based on their income derived from sources other than their salary. |
| Amount of tax payable | The payment of Advance Tax differs for self-employed individuals and business owners compared to companies. | The calculation of payable Self Assessment Tax utilises a distinct formula and does not exhibit variation as seen with Advance Tax. |
Results of Incorrect Assessment
In the event that a taxpayer incorrectly assesses their income and the amount of tax payable, their filed return may be deemed flawed. Currently, under the provisions of the Income Tax Act of 1961, individuals have a 15-day window from the date of filing their return to address any issues. However, if the taxpayer neglects to rectify the errors within this timeframe, the filed return will be officially labeled as defective.
Banks Authorised for e-Tax Payment
Comprehensive list of banks accepting e-tax payments on the portal as of April 28, 2023
| Bank Name |
| Axis Bank |
| Bandhan Bank |
| Bank of Baroda |
| Bank of India |
| Bank of Maharashtra |
| Canara Bank |
| Central Bank of India |
| City Union Bank |
| DCB Bank |
| Federal Bank |
| HDFC Bank |
| ICICI Bank |
| IDBI Bank |
| Indian Bank |
| Indian Overseas Bank |
| IndusInd Bank |
| Jammu and Kashmir Bank |
| Karur Vysya Bank |
| Kotak Mahindra Bank |
| Punjab National Bank |
| Punjab & Sind Bank |
| RBL Bank |
| State Bank of India |
| South Indian Bank |
| UCO Bank |
| Union Bank of India |
Documents Required for Paying Income Tax Online
Identification and Basic Information
- PAN Card
- Aadhaar Card
Income Proofs
- Form 16
- Salary slips and bank statement
- Form 16A, Form 16B, or Form 16C
- Interest certificates issued by bank or post office
Investment Proofs
- Tax saving investment proof
- Home loan statement
- Capital gain Statement
Comprehensive Tax Summary
- Form 26AS
How to Pay Self Assessment Tax?
Self Assessment in Income tax is a system of taxation whereby you are responsible for calculating your income and capital gains tax liability. The self assessment tax can be paid online. Here are the steps which will help you.
- Visit the Income Tax e-filing portal and log in to your account.
- After signing in click on the option of “e-pay” tax option.
- After clicking on above option, Now, click on the new payment button.
- Select ‘Income Tax’ option
- Select the ‘Assessment Year’ and select ‘Self Assessment Tax (300)’ from the dropdown list and continue
- Enter the tax amounts here and continue to complete the payment.
- Select the bank through which you want to make the payment.
- Once the payment is successful, you can download the Challan by clicking on the download button.
Benefits of e-Tax Payment
E-tax payments have revolutionised the way we handle taxes. Enjoy a range of benefits when you choose to pay your taxes electronically.
- Skip the line, save the time: Pay taxes at your convenience, whenever it suits you best.
- Automatic updates: Your tax records are instantly updated, no extra steps needed.
- Instant proof of payment: Get your tax payment receipt immediately.
- Easy tracking: Monitor your tax payment status online with just a few clicks.
- Simple and stress-free: Enjoy a quick and hassle-free tax payment experience.
Conclusion
All the citizens of India who earn a certain amount of annual income are supposed to pay income tax returns. The Income Tax Act of 1961 in India controls the tax payment by citizens of India.
Income tax is deducted at source and some advance tax payments are also made. After this advance tax deduction, a self assessment tax is also paid by individuals. In this, the taxpayer fills in all the details and checks their tax liability. This Income Tax can be paid online by going to the official website of income tax India.
If you want any help with income tax returns you can reach out to Vakilsearch and take help from Legal Experts. They will contact you and solve all your queries and help in filing your income tax returns.
FAQs
What do you mean by SAT?
Self-Assessment Tax refers to the remaining tax amount that a taxpayer is required to pay on their assessed income, after considering the advance tax and TDS (Tax Deducted at Source), when filing their Income Tax Return. As the income tax return cannot be submitted to the Income Tax Department until all the taxes are settled, the SAT provides the last opportunity to clear the outstanding tax liabilities before submitting the income tax return.
What do you mean by Self-Assessment Tax?
Self-Assessment Tax refers to the remaining tax amount that a taxpayer is required to pay on their assessed income, after considering the advance tax and TDS (Tax Deducted at Source), when filing their Income Tax Return. As the income tax return cannot be submitted to the Income Tax Department until all the taxes are settled, the self-assessment tax provides the last opportunity to clear the outstanding tax liabilities before submitting the income tax return.
Is there any specific date for filing the SAT Tax?
No specific or fixed date exists for the submission of self-assessment tax, but it must be completed before filing the Income Tax Return. To settle this tax, taxpayers can utilise the tax challan ITNS 280, which can be submitted either at a bank branch or through online channels.
Is it necessary to pay self-assessment tax?
SAT tax is a form of taxation that individuals pay based on their income from various sources. If a taxpayer inadvertently overlooks a portion of their income during the final payment process, it is possible that either the Tax Deducted at Source (TDS) has not been deducted or the payment has been made at a lower rate. In such cases, SAT proves beneficial as it allows individuals to promptly settle the outstanding amount and prevent interest charges on the taxable sum. Therefore, while not obligatory, it is advisable to incorporate this practice to maintain a disciplined approach towards tax payments.
How is the interest calculated for computing self-assessment tax?
When making tax payments prior to the assessment date, the interest calculation can be approached in two ways. Firstly, the interest is calculated based on the outstanding amount of advance tax that remains unpaid until the payment of SAT tax. Alternatively, the self-assessment tax can be deducted from the advance tax amount, and the interest is then computed starting from the time the payment of SAT is due.
Are there any simple steps for calculating the SAT tax?
Review the income tax slabs available online. - Determine the tax payable on your total income. - Include the interest payable under sections 234A, 234B, and 234C. - Deduct the relief amount under Sections 90 and 90A from the total. - Subtract the MAT (Minimum Alternate Tax) credit amount under Section 115JAA. - Subtract the advance tax amount. - Calculate the final self-assessment tax payable on your income tax.
What is Challan 280 for self assessment tax?
Challan 280 is a payment form used to pay self-assessment tax to the Income Tax Department. It helps taxpayers settle their tax dues before filing their income tax return. This challan can be filled online or offline and is used to record payments made towards self-assessment, advance tax, and other taxes.
Can I pay a self-assessment tax early?
Yes, you can pay self-assessment tax before the end of the financial year. Paying early can help you avoid interest charges and penalties. Ensure you complete the payment before filing your income tax return to reflect the correct tax dues.
Can self assessment tax be refunded?
Self-assessment tax is generally not refundable if it has been correctly paid. However, if you have paid more than your actual tax liability, the excess amount can be refunded after filing your income tax return. The refund will be processed after assessing your return.
What is the penalty for self assessment tax?
If self-assessment tax is not paid on time, you may face interest charges under Section 234A, 234B, or 234C. Additionally, penalties may be levied for late payments or incorrect disclosures. It's important to pay the tax promptly and accurately to avoid such penalties.
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