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What is Self Assessment Tax? How to Calculate, Pay & Download Online

Self-assessment tax is the final amount you owe in income tax after subtracting any taxes already withheld from your income.

  • 2,926 Views | Updated on: Aug 02, 2024

Paying taxes is an essential aspect of financial responsibility, ensuring the smooth functioning of a nation’s economy. Among the various taxes, self-assessment in income tax is critical as it represents the final amount of income tax owed after accounting for all tax deductions and advance payments made throughout the year.

Deducted from your income sources like salary and investments, along with any advance tax payments, this tax ensures you accurately meet your full tax obligations. Understanding what is self assessment in income tax, how to calculate and pay it is vital for taxpayers to avoid penalties and ensure smooth tax return filing.

What is Self Assessment Tax?

Self assessment tax is the final amount of income tax you owe after considering the tax already deducted from your income sources throughout the year. Throughout the financial year, a portion of your income tax might already be deducted at source (TDS) by your employer or bank (TCS) for certain transactions. You might also pay advance tax annually to estimate your total tax liability.

The self assessment tax is the remaining balance you must pay after subtracting the TDS, TCS, and advance tax you already paid from your total tax liability.

Why Should One Pay Self Assessment Tax?

There are two main reasons why you should pay your self assessment tax:

Legal Obligation

In India, filing an income tax return is mandatory if your taxable income exceeds a certain limit set by the government. If you owe taxes after considering the tax deducted at source (TDS) and any advance tax payments, then paying the self assessment tax ensures you meet your legal tax obligations. Not paying these taxes can result in penalties and interest charges.

Seamless ITR Filing

You cannot complete your income tax return filing without paying any outstanding self assessment tax. This means any delay in paying what you owe can lead to delays in finalizing your tax return. This can be inconvenient and potentially cause problems if you need your tax return for other purposes, like applying for a loan.

How to Calculate Self Assessment Tax?

Calculating your self assessment tax in India involves following these steps:

Step 1. Gather Your Income Information

To calculate self assessment, first step is to compile all your income sources for the financial year. This will include salary income, interest income, rental income, capital gains, and income from any other business or profession. You can find most of this information on the income tax documents provided by your employer, bank, and other institutions.

Step 2. Identify Deductions and Exemptions

It is also necessary to research and identify all the tax deductions and exemptions you are eligible for under the Income Tax Act. Some of the common deductions are under section 80C (investments, PPF, etc.), section 80D (medical expenses), and others for housing loan interest, education loan repayments, etc.

Step 3. Calculate Your Gross Total Income and Deductible Expenses

Now, it’s time to add up your income from all sources mentioned in step 1. You must subtract the allowable deductions and exemptions identified in Step 2 from your gross total income to give you your taxable income.

Step 4. Determine Your Tax Liability

If you want to determine your tax liability, you have to refer to the income tax slab rates applicable for the relevant financial year. Then, you can apply the relevant tax rate to your taxable income to calculate your total tax liability. The tax slab rates can be found online, or you can consult a tax professional for guidance.

Step 5. Factor in TDS and Advance Tax

To calculate your TDS and advance tax, subtract the Tax Deducted at Source (TDS) already deducted from your income sources throughout the year (reflected in Form 16) and any advance tax you might have paid.

Step 6. Calculate Self Assessment Tax

If the result from the above step is a positive value, that’s your self assessment tax liability. This means you owe the government this remaining amount after considering the TDS and advance tax paid.

How to Pay Self Assessment Tax Online?

You can conveniently pay your self assessment tax online in India through the Income Tax Department’s e-filing portal. Here is a step-by-step guide:

Visit the e-filing Portal

Go to the official website of the Income Tax Department.

Navigate to ‘e-Pay Tax’

On the homepage, under the ‘Services’ section, look for the option ‘e-Payment’ and click on this link.

Choose Payment Method

The portal offers two options:

  • Pre-Login (without logging in): This method allows you to make a quick payment without logging into your account. Click on “e-pay Tax” and proceed to the next steps.
  • Post-Login (using your registered account): If you have a registered account, you can log in using your User ID and password. Once logged in, navigate to the ‘e-File’ tab and select ‘e-Pay Tax’.

Enter Details

You will need to provide the following details:

  • PAN (Permanent Account Number): Enter your valid PAN number.
  • Assessment Year: Select the relevant assessment year for which you pay the self assessment tax.
  • Payment Type: Choose ‘(300) Self Assessment Tax’ from the dropdown menu.

Tax Payment Details

Enter the exact self assessment tax amount you calculated earlier.

Choose Payment Mode

Select your preferred method of online payment. The portal typically accepts options like net banking, debit card, and credit card.

Verify and Submit

Carefully review all the entered details for accuracy. Once confirmed, proceed to submit the payment.

Payment Confirmation

Upon successful payment, you’ll receive a confirmation message or download a challan (payment receipt) for your records. Keep this document for future reference.

How to Download the Self Assessment Tax Challan Online?

To download the Self Assessment Tax Challan online, follow these steps:

  • Visit the official website of the Income Tax Department.
  • Look for the option ‘e-Payment under the services section on the homepage and select option ‘Pay Taxes Online.’
  • Choose a payment method. The portal offers two options: Pre-Login (without logging in) and Post-Login (using your registered account)
  • Enter your valid PAN number.
  • Select the relevant assessment year for which you’re paying the self assessment tax.
  • Choose ‘(300) Self Assessment Tax’ from the dropdown menu and enter the exact tax amount you calculated earlier.
  • Select your preferred method of online payment. The portal typically accepts options like net banking, debit card, and credit card.
  • Review all the entered details for accuracy. Once confirmed, proceed to submit the payment.
  • Upon successful payment, you’ll receive a confirmation message and an option to download a challan (payment receipt) for your records. This challan reflects your self assessment tax payment.

Difference between Self Assessment Tax and Advance Tax

Advance tax is a proactive measure to pay taxes throughout the year, while self assessment tax is a final settlement of any outstanding tax due at the end of the financial year. Let us take a look at the detailed differences between these two:

Feature

Self Assessment Tax

Advance Tax

Definition

The remaining tax liability you owe after considering tax deducted at source (TDS) and advance tax paid during the year.

Tax payments are made in installments throughout the financial year based on your estimated yearly income.

Payment Timing

Paid after the end of the financial year but before filing your income tax return.

Paid in installments during the financial year (typically 3 installments) on specific due dates.

Calculation

Calculated based on your actual income for the entire financial year.

Based on an estimate of your income for the financial year.

Purpose

Settles your final tax liability for the year.

Pays your tax liability throughout the year to avoid a large lump sum payment at the end.

Penalty for Non-Payment

Attracts penalty and interest charges if not paid before filing your return.

No penalty for underpayment, but interest is charged on the shortfall between advance tax paid and actual tax liability.

Applicability

This applies to taxpayers whose total tax liability after TDS exceeds a certain limit set by the government.

This applies to taxpayers whose estimated tax liability for the year exceeds a certain limit set by the government.

Key Takeaways

  • Self assessment tax is mandatory for taxpayers with taxable income exceeding the government-set limit to avoid penalties and interest charges.
  • Advance tax is paid in installments during the financial year, whereas self assessment tax is paid after the financial year but before filing the return.
  • Non-payment of self assessment tax attracts penalties and interest.
  • You must pay self assessment tax to complete your income tax return filing, which prevents delays and potential issues like loan application rejections.

Conclusion

Self assessment tax plays a crucial role in tax filing, ensuring that any outstanding tax liability is settled before submitting your return. Taxonomies can fulfill their legal obligations and avoid penalties by understanding the steps to calculate and pay this tax. Additionally, recognizing the difference between self assessment tax and advance tax helps in better financial planning throughout the year. By staying informed and proactive, taxpayers can ensure a smooth and compliant tax filing experience, contributing to their financial health and the broader economic system.

FAQs on Self Assessment Tax

1

Who needs to file a self assessment tax return?

Anyone who has income that isn’t taxed at source, such as self-employed individuals, freelancers, or those with rental or investment income, needs to file a self assessment tax return.

2

How do I file a self assessment tax return?

You can file a self assessment tax return online through the tax authority’s official website by filling out the required forms and submitting the necessary documentation.

3

What happens if I miss the deadline for filing my self assessment tax return?

Missing the deadline can result in penalties and interest on the outstanding tax amount. The exact penalties depend on how late the return is filed.

4

Can we avoid paying penal interest if we partially pay self assessment tax?

Partial payment of self assessment tax can reduce the interest on the unpaid amount, but penal interest may still apply to the remaining balance.

5

How is self assessment tax different from advance tax?

Self assessment tax is paid after the end of the financial year when computing the final tax liability, while advance tax is paid during the financial year in installments based on estimated income.

6

Can I pay self assessment tax offline?

Yes, self assessment tax can be paid offline by visiting designated bank branches and filling out the necessary challan forms.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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