What is Self Assessment Tax, and How to Pay it?

Last Updated: 11 Oct 2024

You may be surprised to learn that there are three ways the government can take taxes out of your money. Tax Deducted at Source (TDS), Advance Tax, and Self-Assessment Tax are some of these techniques. The topic of today’s discussion will be self-assessment tax, which is crucial for submitting your income tax return (ITR).

Self Assessment Tax Meaning

The remaining tax, after deducting the TDS and advance tax paid throughout the fiscal year, is known as self-assessment tax. To put it simply, an assessee (a person entitled to pay tax) must pay SAT to the government if, during the assessment year, it is discovered that they have additional tax liabilities after deducting the TDS and advance tax paid in the previous year.

Without processing the self-assessment tax, the return filing will not be deemed complete. There is no set date for paying self-assessment tax, in contrast to the deadline for filing taxes. SAT can be easily paid by submitting an ITNS 280 self-assessment tax challan online or in person at a certain bank branch. To finish the online filing and payment process, all you need is an active net banking account.

Although there is no deadline for paying self-assessment tax, you must be sure to pay it before submitting your income tax returns for the fiscal year to avoid incurring interest charges.

Why Should One Pay Self-Assessment Tax?

Comprehending the rationale behind the Self-Assessment Tax (SAT) is imperative for proficient financial management. Let’s dissect it into the following main points:

1. Making Tax Payments Accurate:To make up for any inconsistencies in their tax payments, people could need to pay SAT. For example, an underpayment of advance tax could occur from someone forgetting to list certain sources of income.
2. Fixing TDS InaccuraciesAccording to specific regulations, employers and financial institutions are needed to deduct tax Deducted at Source. These conclusions, nevertheless, might not always be true. Individuals can make corrections to the TDS amount deducted from their income by paying SAT.
3. Keeping Track of Extra RevenueEven though a person’s wage might make up the majority of their income, they might also receive income from other sources, such as mutual funds or fixed deposit investments. It is possible that their employer is unaware of these extra sources of income, thus self-evaluation is required to make sure all money is accounted for.

How to Pay Self-Assessment Tax Online?

• Step 1: First Log in to Your Income Tax Website
  First things first, head over to the income tax website, which is www.incometaxindia.gov.in. Once you’re there, sign in with your credentials.
• Step 2: Access the “e-Pay Taxes” Option
  After signing in, look for the option labeled “e-Pay taxes.” This should be easy to spot on the website’s interface.
• Step 3: Fill in Your Details
  Now, it’s time to input some information. Provide your PAN card details, name, and mobile number as requested. Make sure everything is accurate to avoid any issues.
• Step 4: Choose the Assessment Year
  Select the appropriate year for assessment. This is the year for which you’re making the payment.
• Step 5: Select Payment Type
  You’ll see a list of payment types. Choose “(300) Self Assessment Tax” since that’s what you’re paying.
• Step 6: Choose Your Bank
  From the dropdown menu, pick the bank you want to use for the payment. Make sure it’s a bank that supports Net Banking.
• Step 7: Enter the Tax Amount
  Now, enter the amount of tax you need to pay. Double-check the figure to ensure accuracy.
• Step 8: Make the Payment
  Click on the option to proceed with the payment. You’ll be redirected to your chosen bank’s Net Banking page to complete the transaction securely.
• Step 9: Note the Challan Details
  Once the payment is successful, a challan will be displayed on the screen. Take note of the details, including the Challan Identification Number (CIN) and the bank’s name.
• Step 10: Keep Records
  It’s always a good idea to keep a record of your transactions. Save a digital copy or download the challan for your records.
• Step 11: Check Form 26AS
  Within a few days, the payment should be reflected in your Form 26AS; if it doesn’t, don’t worry. You can always fill in the challan details when filing your income tax return.

Procedure for Offline Payment of Self-Assessment Tax

Yes, self-assessment tax payments can be submitted offline. Below are the steps:-

• Get a Challan 280 form by visiting any of the local bank branches.
• At the bank’s counter, fill out the necessary information and turn it in with the payment.
• The bank employee will provide you with a receipt once you’ve made your payment. As evidence of payment, keep this receipt secure.
• It can take up to ten days for your Form 26AS to show the payment. Your Form 26AS should show the payment under the heading “Self-assessment tax.”

Calculation of Self-Assessment Tax (Computation)

The two procedures listed below for calculating interest will be taken into account if a person has paid any taxes before the assessment date:

• For the period until the self-assessment tax payment date, the amount of unpaid forward tax will be taken into account when calculating interest.
• After deducting the self-assessment tax, the advance tax amount will be computed starting on the day that the self-assessment tax payment is received.

Difference Between Self-Assessment Tax and Advance Tax

Aspect	Self Assessment Tax	Advance Tax
Definition	Self Assessment Tax is the tax paid by taxpayers on their assessment of their income and liabilities after the end of the financial year.	Advance Tax is the tax paid periodically by taxpayers based on their estimated income for the current financial year prior to the end of the financial year.
Timing of Payment	Self Assessment Tax is paid after the end of the financial year, typically during the filing of income tax returns.	Advance Tax is paid in installments in the financial year, as per the due dates prescribed by tax authorities.
Assessment Basis	Taxpayers assess their income and liabilities and pay tax accordingly, subject to scrutiny and verification by tax authorities.	Taxpayers estimate their income for the current financial year and pay taxes based on these estimates, which may be adjusted later if actual income varies.
Frequency of Payment	Paid once after the end of the financial year, during the filing of income tax returns.	Paid in installments, typically quarterly or as per the specified due dates throughout the financial year.
Penalties for Non-payment	Penalties may apply for late payment or underpayment of Self Assessment Tax, including interest charges.	Penalties may apply for non-payment or underpayment of Advance Tax, including interest charges and potential penalty fees.
Documentation Requirement	Taxpayers need to provide accurate documentation and details of their income, expenses, and deductions while filing for Self Assessment Tax.	Taxpayers need to estimate their income for the current financial year and pay Advance Tax based on these estimates, with periodic declarations to tax authorities.

Consequences of Non-payment or Part-payment of Self-Assessment Tax

Section 140A (3) states that an individual will be deemed an assessee in default with regard to any owed amount if he or she does not pay self-assessment tax or interest, in whole or in part. According to section 221(1), a taxpayer who is considered an assessee in default will be required to pay a penalty equal to the amount the assessing officer may impose, as well as any further amounts the assessing officer may from time to time direct in the event of a continuing default. But the total penalty cannot be greater than the overdue amount of taxes.

Frequently Asked Questions

When is the self-assessment tax payment deadline?

There isn’t a set deadline for paying self-assessment taxes. However, you can receive a warning or notification from the income tax agency if you wait to pay it before filing your return. Penalties or interest can also be owed.

Will self-assessment tax be accepted offline?

It is possible to pay for SAT offline. All you have to do is deposit the information with an approved bank together with the relevant income tax challan. Following a few verifications, the bank will credit your PAN with the income tax payment for self-assessment tax.

What distinguishes advance tax from self-assessment tax?

Despite being completely distinct, they are frequently confused. The self-assessment tax is a tax that must be paid during the assessment year, although the advance tax must be paid in the financial year if your tax burden after TDS exceeds 10,000.

Can I make installment payments for self-assessment tax?

The self-assessment tax is indeed payable in installments. However, don’t forget to submit the ITR before making the whole payment.