Self Assessment Tax

Individuals have to pay the Self Assessment Tax (SAT) for income from other sources. There is no specification for the date of payment. It can be paid online through a few simple steps. It can also be calculated with a simple procedure.

Individuals are expected to compute the final liability of income tax after deducting the TDS amount from the source of income as well as the advance tax payable for the financial year. When the year is almost over, if there is any tax pending before filing an individual’s income tax return, a final amount that the individual is liable for is calculated is known as the self-assessment tax. This is the final calculation before filing the tax return. This is also known as SAT.

Read about the Union Budget 2021 Highlights:
Time limit for reopening of income tax assessment cases reduced
Union Finance Minister Nirmala Sitharaman in her budget speech on Monday stated that the time limit for reopening of income tax assessment cases have been reduced to three years from six years. The decision has been taken to end uncertainty in the minds of taxpayers over reopening of assessment cases. For serious tax fraud cases where the concealment of income is Rs.50 lakh or more, the time limit would be 10 years. She added that a dispute resolution committee would be set up for for small taxpayers with taxable income up to Rs 50 lakh while a proposal to start a faceless Income Tax Appellate Tribunal (ITAT) has also been made in the budget.

Who Pay Self Assessment Tax?

Generally, SAT is payable by an individual related to income from other sources. For example, if an individual has missed out on an income when making the final payment in the form of installment of their advance tax, etc. It could also be a possibility that TDS was not deducted or done at a lesser rate against the higher tax rate applicable on your income tax filing. It happens often for salaried individuals that a fixed deposit or from short term bonds he or she have been able to earn a sizable amount and hence have not mentioned it to your employer, driving the amount not to be considered for tax deduction. Therefore the self assessment tax will be required. SAT or self-assessment tax is paid for a particular financial year end. There is no specification on the date of payment of this tax. The ideal time is to pay it as soon as possible, without waiting for the tax returns filing date, as a way to avoid payment of interest on the tax amount.

How to Pay Self Assessment Tax Online?

Here are the following steps to pay the self-assessment tax online. However, note that the online tax payment platform only supports Net Banking:

  1. An individual can log on to the income tax website,
  2. Once he or she has signed in, an option “e-Pay taxes” will be visible.
  3. The person on clicking on this link will be redirected to the National Securities Depository Ltd, website.
  4. The individual can then select “challan no./ITNS 280” followed by “(0021) Income tax (other than companies)”.
  5. The person then needs to fill in the details such as PAN card details, name, contact details such as address, residential and official contact numbers and mobile numbers.
  6. The individual needs to then choose the appropriate year for assessment that he or she will be making the payment for.
  7. The person then needs to select the “type of payment”, which in this case will be “(300) Self Assessment Tax”.
  8. The individual can then choose the bank of their choice from the dropdown menu to make the payment.
  9. He or she needs to then enter the “tax payable amount”.
  10. The individual will be then directed to their bank’s own Net banking page to make the payment.
  11. Once the payment is made successfully a challan will be displayed. This will include CIN, all the payment details along with the bank’s name with which the payment has been made.
  12. It is advisable to keep a scan or hard copy of the same.
  13. Generally after the SAT is paid, it reflects on the individual’s Form 26AS within a few days. If it does not show, the challan details can be filled in when filing the income tax return.

Self-Assessment Tax Calculator (Computation)

If an individual has made any payments for tax prior the assessment date, the following two processes for interest calculation will be considered:

  1. The amount of advanced tax that has not been paid will be the amount considered for computing the interest for the date upto the payment of the self assessment tax.
  2. The advance tax amount after subtracting the self assessment tax will be considered for computed from the date the payment for self assessment tax has been made.

The following procedure can be followed for the computation of self assessment tax:

  1. First calculate taxable amount payable on the individual’s total income with the help of the income tax slabs available online.
  2. Then add the interest that is payable under Section 234A/234B/234C.
  3. Once you have added the amount, deduct the relief amount under Section 90/90A/90 from the total.
  4. Then further subtract the MAT Credit amount under Section 115JAA.
  5. Further subtract the advance tax amount.

This will lead to the self-assessment tax payable on the individual’s income tax.

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