Self-Assessment Tax: Guide to Calculation and Online Payment

What is self-assessment tax?

As you may know, TDS and advance tax is paid in advance. However, the total tax paid may be less than the actual tax liability of a taxpayer. So, this difference in amount is paid in the form of self-assessment tax. Simply put, the self-assessment tax is the outstanding amount that is not covered by advance tax or TDS. ^¹

You must note that self-assessment tax is paid at the end of a financial year. Although there is no fixed date for self-assessment tax payment, it is paid before filing the income tax returns. Delay of payment may attract interest on the outstanding tax amount. ^² The self-assessment tax is paid under Challan 280. ^²

Who needs to pay self-assessment tax?

Self-assessment tax is paid by individuals who need to file income tax returns. Taxpayers who have a mismatch or shortfall in TDS or advance tax calculation amongst other reasons need to pay self-assessment tax I In such a case, the taxpayer must calculate the tax liability and pay it before filing the income tax returns. ^²

Self-assessment tax: Calculation

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Now comes the essential part of the discussion: how to calculate self-assessment tax liability. Well, calculating self-assessment tax liability is not that difficult. Follow these simple steps to do the needful:

1. Calculate total income

   The very first step is to calculate the total income you receive from all the sources. It may be freelancing, salary, gains, profits, etc.

2. Deduct eligible deductions

   If you are eligible for deductions, make sure to deduct the amount from the total calculation. You may seek deductions under Section 80C, 80D, etc., under Income Tax Act of 1961

3. Tax calculation

   Now, you have the remaining amount you have after deductions. The final tax liability will be charged on this amount. So, depending on your income tax slab, you need to calculate the tax liability on this amount

4. The formula

   The formula to calculate the tax liability is as follows: [(A+B) – (C+D+E+F)]

   Here,

   A = Total payable tax

   B = Interest under section 234A/234B/234C

   C= Tax Relief as per Section 90/90A/91

   D= MAT Credit as per Section 115JAA

   E= TDS/TCS

   F= Advance Tax

Steps to pay self-assessment tax online:

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Once you have calculated the tax liability, the next step is to pay the tax. You can pay the self-assessment tax online in no time. Here are the steps that you need to follow:

1. E-filing portal

   The first step is to visit the official portal of income tax filing (e-filing portal)

2. Login to Account

   Login to your account

3. E-pay tax

   Now, choose the "e-File" tab and click on the "e-Pay Tax" option

4. Choose new payment

   Here, you need to click on the new payment option. On the next page, choose ‘Income Tax’ and then proceed

5. Enter details carefully

   You will have to enter certain details like ‘self-assessment tax (300)’ and ‘assessment year’. Then proceed to the next step

6. Enter tax liability

   On the next page, enter the total tax liability and proceed to the payment

7. Make the payment

   Choose the preferred payment mode and the bank name

Make sure to download the challan once you are done with the payment.

Steps to download self-assessment Challan

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Once you have successfully paid the self-assessment tax, you may download the challan for reference. The steps to download the challan are quite simple. Here is what you need to do:

• Visit the e-filing portal and use your credentials to log in
• Now, choose 'e-file’ and then click on the pay option
• In the options available, click on ‘payment history’ and choose the challan that you need to download
• Under Action,’ click on the three dots to choose the Download option. The challan will be successfully downloaded on your system

Conclusion:

Self-assessment tax is a crucial part of income tax payment. So, make sure to calculate the total tax liability on time and pay it before filing the income tax returns to avoid penalties. Using the formula above, you can easily calculate the amount and pay it online or offline at your convenience.

 

FAQs

1. Can I pay for self-assessment offline?

   Yes, you can pay the self-assessment tax offline as well as online. To pay the tax offline, you need to visit a nearby branch of your bank and ask for Challan 280.

   Fill out the form and submit it along with the tax amount. After successful payment, the bank will provide you with the payment receipt. In under 10 days, the payment will be updated and reflected in your account. ^¹

2. What happens if I don't pay the self-assessment tax?

   Paying complete self-assessment tax liability prior to filing income tax returns is mandatory. If you fail to do so, penalties and charges may be imposed on your account. ^¹

3. Is it possible to pay for self-assessment in instalments?

   Yes, you can easily pay the self-assessment tax liability in instalments. However, make sure to pay the total due amount before filing the income tax returns. ^¹

4. What is the date to pay the self-assessment tax?

   There is no fixed due date for filing self-assessment tax. The only rule is to pay it before filing the income tax returns. ^¹