Payment and Computation of Self Assessment Tax

Ashish M. Shaji

22 Jun, 2023

Individuals are required to pay self assessment tax for income from other sources. No specification for the payment date is specified. This tax can be paid online through simple steps. It can also be calculated with simple steps. In this article, we shall discuss the payment and computation of the Self Assessment Tax.

Meaning of Self Assessment Tax

This form of tax refers to the amount that an assessee has to pay on the requisite income after deducting the advance tax and TDS for a financial year. Those individuals who must file their income tax returns should pay this tax beforehand. This tax can be filed by a taxpayer by submitting Challan 280, also used for e-filing income tax.

As stated earlier, there isn’t any specific date for the payment of this tax as it is computed at the end of a financial year. Thus it doesn’t have any deadline associated with it. However, taxpayers should make payment before filing their respective income tax returns in order to avoid paying interest on the amount of tax. 

Significance of paying Self Assessment Tax

This form of taxation has to be paid by individuals who earn an income from other sources. The tax amount is levied for the reasons mentioned below:

• There may be certain occasions where a taxpayer fails to take an income into consideration while paying advance tax;
• There may be occasions when the TDS amount deducted may be inaccurate;
• A salaried employee can earn a substantial income from investments like fixed deposits and mutual funds, which the employer may not be aware of.

Thus, self assessment in income tax is critical to avoid inaccuracies pertaining to the taxable income.

Computation of Self Assessment Tax

 In case an individual makes any payment for tax before the date of assessment, then the following processes for calculation of interest can be considered:

• The advance tax amount that is not paid will be the amount considered for calculation of the interest for the date up to the payment of SA Tax.
• The amount of advance tax after subtracting the SA Tax shall be considered for computation from the date the payment for SA Tax has been made.

The below-mentioned procedure can be followed for its computation:

• Firstly, calculate the taxable amount that is payable on the individual’s total income with the assistance of the income tax slabs available online;
• Thereafter add the interest payable under Section 234A/ Section 234B/ Section 234C;
• Once the amount is added, deduct the relief amount under Section 90/90A/ 91 from the total;
• Then subtract the MAT credit amount under Section 115JAA;
• Then subtract the amount of advance tax.

It will lead to the Self Assessment tax payable on the income tax of an individual.  

How to pay this tax online?

The following procedure can be followed for the payment of this tax online:

• Firstly visit the official website of the income tax department www.incometaxindia.gov.in
• Once you have signed in, there will be an option of e-pay taxes, click on this option;
• When you click on this link, you would be redirected to the website of National Securities Depository Limited;
•  Then you can choose the Challan number ITNS 280 followed by 0021 income tax (other than companies);
• Then you will have to provide details like PAN number, name, contact details, residential and official contact numbers;
• You will be required to choose the appropriate year for assessment for which the SA Tax payment will be made;
• Then you will have to select the type of payment, which is self assessment tax;
• You can then select the bank of your choice from the menu to make the payment;
• After the bank is selected, enter the amount of tax payable;
• Then you would be redirected to the preferred bank’s payment page for making payment;
• After successful payment, challan will be generated. It will contain a detailed representation of the transaction, including CIN and the name of the bank;
• It is advisable to keep a soft or hard copy of the same for future reference;
• Usually, once this tax amount is paid, it is reflected on the individual’s form 26 AS in a few days time. However, if it is not reflected, the challan details may be filled in while filing the ITR.

What happens on an inaccurate self assessment?

In case where the assessee makes incorrect self assessment of income and tax amount payable, then the return may be considered defective. The provisions under the Income Tax Act permit taxpayers to sort their returns in 15 days of filing the return, but if the assessee fails to correct the error, the return filed will be declared defective.

Conclusion

The payment of this form of tax is quite simple online. Now that you know how to compute and pay the self assessment tax, strive to pay it off as quickly as possible without waiting for the date of income tax return filing.

Read our article: Income Tax Challan 280: Online and Offline Methods to Pay