At the end of a financial year, a taxpayer has to check if there is any pending tax which should be paid after paying TDS (Tax Deducted at Source) and advance tax. This pending tax is known as the self-assessment tax. Self-assessment tax has to be computed by the taxpayer and paid on time to avoid penalty.
If you have an extra source of income or see a quick jump in your income in a given year, you may need to pay self-assessment tax. Read on to know how to calculate self-assessment tax, how to pay it online and other details.
Every taxpayer needs to pay tax to the Government for their income by the end of each financial year. Self-assessment tax is paid when there is an extra source of income which is not calculated while making tax payments or is exempted from TDS for the same reason. You also have to file for an income tax return which cannot be done until all tax payments are cleared. So, you must make the payment within the same assessment year.
Any individual with a source of income should pay self-assessment tax to the Government by the end of each financial year. For salaried individuals, the employer makes the tax payment. Missing out on self-assessment tax happens mostly when an individual earns a lump sum amount of money from a fixed deposit or other investment and misses on including it while filing TDS. However, one should consider all income sources while computing income tax payments.
In cases where an individual has made tax payments prior to the assessment date, there are two ways to calculate the interest payable-
Here is another simpler procedure to follow the calculation-
Step 1: Calculate the taxable amount on the total income by using the income tax slabs available online.
Step 2: Calculate interest payable under Section 234A, 234B and 234C.
Step 3: Deduct the relief amount from the total amount under Sections 90 and 90A.
Step 4: Deduct the MAT credit score amount under Section 115JAA.
Step 5: Finally deduct the advance tax amount.
Step 6: Payable self-assessment tax amount will be available.
One can follow the given steps to pay self-assessment tax online using a net-banking facility-
Step 1: Visit the income tax website of the Government
Step 2: Login and choose from e-pay options
Step 3: The individual will be redirected to the National Securities Depository Ltd. website
Step 4: Select the challan number/ITNS 280 and ‘0021 Income Tax (other than companies)
Step 5: Fill in PAN details, name, contact details, address and other details as required and choose the assessment year
Step 6: Under the type of payment, choose (300) Self-Assessment Tax
Step 7: Choose the bank and enter ‘tax payable amount’
Step 8: On the redirected net banking page of the bank, make the payment
Step 9: Check CIN, payment details and name of the bank in the self-assessment tax challan provided
Step 10: Keep a soft copy or print out the challan for future requirements
Form 26AS is an accumulation of all taxes or TDS certificate for taxes paid by an individual or company, which can be useful for the taxpayer while claiming credits. One can verify the taxes and even the TDS/TCS amount which has been deducted and report to the authority in case of any discrepancy or mismatch.
An individual or company pays SAT or self-assessment tax for income earned through extra sources in regular intervals or lump sums. One can also pay the self-assessment tax offline by visiting the nearby bank branch and submitting Challan 280 and the required documents.
Ans: There is no deadline for filing self-assessment tax. However, if you are submitting a return, you should do so by October 31. Without paying SAT, you cannot file ITR, which one should do by the end of the financial year to avoid penalties.
Ans: As the name suggests, Self-assessment tax is the tax an individual pays for income from other sources. So, it is possible to miss out on an income source while filing income tax and most probably exclude the TDS deduction. So, it is not necessary but a good practice.
Ans: Following are the forms you need to fill in if you are self-employed:
A tax return by HMRC in April every year for that financial year
Form SA100 and SA101 by HMRC
Ans: It may happen in some cases that the taxpayer lost the challan. That individual can log into their account through net banking, choose the tax centre and click on ‘reprint challan’. If one makes an offline payment, then he/she will have to go to the respective bank.
Ans: Following are the instances where you have to get a self-assessment tax return:
Income from overseas
Income from savings or investments
Before you go…
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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.