Section 140A Of The Income Tax: How To Self-Assess Your Tax Amount

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:

1. 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. 
2. Before one submits the return, they have to calculate if they have to pay any tax amount or any interest/fee. 
3. 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. 
4. You have to submit the proof of the return of income along with the deposit challan.
5. 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:

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:

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.

Also Read: Income Tax Slabs In India For FY 2022-23: New Tax Regime Vs Old Tax Regime

Tax Liability for Self-Assessment under Section 140A of the Income Tax

Here’s a stepwise guide to calculate the tax liability under Section 140A of the Income Tax Act:

1. Computing the total income for the concerned year and calculating the tax amount based on tax slabs. 
2. Adding surcharge* and education cess @2% + SHEC @1%
3. Deductions from the calculated tax amount included  

• Relief under Section 89 or Section 90/91 (for tax paid outside India)
• Relief under Section 90A (for tax paid outside specified Indian territory)*
• Tax credits provisioned under Section 115JAA
• Advance tax amounts

4. The addition of interest and fees for late filing under Section 234A was reduced by 

• Advance tax payments (if any)
• The tax collected at source
• Reliefs under Section 90/90A/91 or 115JAA

5. Interest is calculated for defaulting advance tax payments under Section 234B.
6. Interest for deferment of advance tax amount under Section 234C
7. Penalty for delay in payment of income tax return under section 234F

(* denotes ‘wherever applicable.’)

Also Read: How To File Income Tax Return Using The New Tax Filing Portal?

Final Word

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