Understanding what is self-assessment tax is essential to comply with the country’s taxation rules and avoid any consequences of non-payment or delayed payment. The government collects income tax in 3 ways:
- Tax Deducted at Source (TDS)
- Advance Tax
- Self-Assessment Tax (SAT)
Read on to learn more about the SAT, how to calculate it and how to make the payment.
Meaning of Self-Assessment Tax
This is the amount that an individual pays on their income after deducting TDS and advance tax for the financial year. Individuals who need to file their ITR need to pay this tax beforehand.
You need to pay it when the TDS or advance tax amount is lower than the actual tax liability. The difference may arise due to several reasons, such as:
- When you fail to consider an income while paying the advance tax
- In case the TDS amount that you deducted is not accurate
- If a salaried employee earns a high income from investments, which the employer doesn’t account for
Steps to Calculate Self-Assessment Tax
Here are the steps you to follow to calculate your SAT:
- Step 1: Compute your income from various sources, including salary, capital gains, profession, etc.
- Step 2: Consider the exemptions and tax deductions, such as Section 80C, 80D, etc.
- Step 3: Compute the payable tax on the balance according to the income slab you fall under
- Step 4: Calculate the SAT using the formula given below
[(A+B) – (C+D+E+F)]
Here,
- A is the total tax payable
- B is the interest under section 234A/234B/234C
- C is the tax relief under Section 90/90A/91
- D is the MAT Credit under Section 115JAA
- E is the TDS/TCS
- F is the advance tax
You can also use an online calculator for accurate and quicker results. To use the tool, you will just need to input the relevant income, exemption, deduction and tax details.
Also Read: Why ITR Filing is Important?
Know How to Pay Self-Assessment Tax Online and Offline
- Follow these steps to pay for your SAT online:
- Step 1: Log in to your account on the Income Tax e-filing portal
- Step 2: Navigate to the ‘e-File’ tab and click on ‘e-Pay Tax’
- Step 3: Click on ‘New Payment’
- Step 4: Choose the ‘Income Tax’ option and click on ‘Proceed’
- Step 5: Select the ‘Assessment Year’ and ‘Self-Assessment Tax (300)’ and click on ‘Continue’
- Step 6: Type in the tax amounts, click on ‘Continue’ and pay through your preferred mode
- Step 7: Click on ‘Download’ to download the Challan once you complete the payment
- You need to follow these steps to pay your SAT offline:
- Step 1: Download the tax challan 280 from the Income Tax website and print it out
- Step 2: Provide your PAN, assessment year, address, mobile number and email ID
- Step 3: Go to the bank and submit the filled challan physically and pay through cash, cheque or demand draft
- Step 4: Collect the challan’s receipt from the bank after you complete the payment
Consequences of Non-Payment of Self-Assessment Tax
Here is what happens when you do not pay your SAT:
- You will be responsible for a high interest liability
- You might need to face penal consequences
- ITR will be considered a defective return
- Imposition of late fees, penalty and interest for taxation purposes
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FAQs on Self-Assessment Tax
What is self-assessment tax with an example?
Here is an example of SAT:
- Taxable income= ₹3 lakhs
- Applicable tax rate= 30%
- Then, the SAT would be ₹90,000
Is self-assessment tax compulsory?
Yes, you need to pay this tax if you are required to file an income tax return and your TDS/advance tax is lower than your actual tax liability.
How do I check my self-assessment tax?
You can check your SAT by logging on to the ‘e-Filings’ portal on the official Income Tax website.
