Section 140A Of The Income Tax: How To Self-Assess Your Tax Amount
17 May 2022
The Income Tax Department makes it mandatory for Indian citizens to make a self-assessment of all their incomes and the respective income tax paid in advance. If there is a shortfall in the tax paid before, then they need to pay a self-assessment tax as per provisions of Section 140A of the IT Act. Self-assessment is essential before filing IT returns for income under sections 139, 142 (1), 148 or 153A. You need to pay Self-assessment tax prior to filing IT return and after availing credit for advance taxes already paid. Read on to know all the details about Section 140A.
What is Section 140A of the Income Tax Act?
Taxpayers file their returns on the basis of all incomes earned in a year. Before filing a return, they must calculate the total tax liability, consider the advance taxes payable and pay the self-assessment tax if any discrepancies arise. Therefore, it is the total amount paid by the taxpayer during the final income assessment.
Typically, one can pay the self-assessment tax under section 140A at any authorised bank or online. All the particulars, including challan number and payment date, needs to be recorded and mentioned while filing the tax return. One should make the payment after considering the advance tax paid.
Section 140A of the IT Act makes it mandatory to pay self-assessment tax before filing returns. If one fails to pay the tax amount in time, they are liable for an additional interest amount under Section 234A. The delay in filing IT returns automatically attracts a penalty.
Provisions of Section 140A of Self-Assessment
Here are some of the provisions of Section 140A:
Section 139 states that an individual with an income exceeding a threshold is liable to furnish his/her tax return within the given date. In case of any delay in the tax payment or return filing, one is liable to pay a penalty.
Before one submits the return, they have to calculate if they have to pay any tax amount or any interest/fee.
You have to pay the self-assessment tax prior to filing your return. This has to be done compulsorily by online payment through the internet banking of certain authorised banks.
You have to submit the proof of the return of income along with the deposit challan.
If the amount you pay is lower than the total of tax, interest, and fees, the amount will be used to first adjust the interest and fee that is payable. The remaining will be used for adjusting tax payable.
Procedure for Self-Assessment under Section 140A
The self-assessment tax calculation procedure, in general, is as follows:
Tax payable on total income
Interest amount under section 234A/234B/234C
Relief under Section 90/90A/91
MAT Credit under section 115JAA
Advance tax paid
= Self-assessment tax payable
However, if the self-assessment tax amount is not fully paid, then the amount one pays will first go towards payment of interest and the rest for paying the tax. In that case, the calculation is as below:
Surcharge augmented income tax
Interest amount under section 234A/234B/234C
TDS and advance tax payable
Self-Assessment payable under Section 140A
2,00,000+80,000-90,000 = 1,90,000
Self-assessment tax amount
So, here the entire Self-assessment tax is not paid. Naturally, a portion of Rs. 1.20 lakh will go towards penal interest payment and the rest for income tax payment.
The Income Tax Department specifically requests individuals to take extra care while calculating their tax amounts and doing the self-assessment. An Assessing Officer commences assessment only after individuals complete their self-assessment. This is because Section 140A of income tax often precedes summary assessment, scrutiny assessment and judgement assessment.
FAQs on Section 140A of the Income Tax Act
Q1. Is self-assessment absolutely mandatory?
Ans: Section 140A of the Income Tax Act requires all citizens to self-assess their tax liabilities before they opt to file their IT returns for a given financial year. This will help them to calculate the amount of self-assessment tax.
Q2. How is self-assessment tax different from advanced tax paid?
Ans: Advance tax is the tax you need to pay if you are a salaried individual with other income sources and the tax liability for the year after TDS deduction stands at more than Rs. 10,000. Self-assessment tax is the amount you pay before return filing if you see that some tax is due even after TDS payment or advance tax payment.
Q3. Is payment of tax (for an un-taxable income) a problem?
Ans: If you do a self-assessment before filing an income tax return and finds out that he/she is not liable to pay any income tax, then the IT Department refund would be initiated.
Q4. Can the IT dept. impose a penalty if 90% of the tax amount is paid? If yes, on what basis is it calculated?
Ans:If you pay advance tax up to 90%, then no penalty will be charged. However, if the taxpayer pays 90% of the self-assessed tax amount, the IT Department charges a penalty on the remaining 10%.
Q5. Can I pay self-assessment tax online?
Ans: The self-assessed tax amount has to be sent online via internet banking. You can pay the amount online through authorised banks only. This mandate has come into effect from 2008.
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This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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