Self Assessment Tax, Pay Tax Using Challan 280, Updating ITR: Taxpayers should ensure that no tax payment is pending before filing the income tax return. If anyone realises that they had paid less than due after all calculations, then they should pay the balance tax. It refers to Self Assessment Tax (SAT) that individuals have to pay for income from others. There is no specification for the payment date, and one can pay it online or offline. After deducting the TDS amount from the income source and Advance Tax payable for the financial year, individuals have to compute the liability of income tax.
Which Tax Refers to Self Assessment Tax and Who Pays It?
While filing income tax returns, taxpayers have to do an entire computation of income and taxes to get filed in the returns. Sometimes the tax paid is less than the actual amount payable. This shortfall of tax refers to Self Assessment Tax or simply SAT, which must get paid before filing ITR. Any individual having income from other sources has to pay SAT.
For instance, while making the final payment in the form of an advance tax installment, if the taxpayer missed out on an income, they have to pay SAT. A salaried person ends up paying less than due in cases like Interest from Saving Bank, Interest from FD, and short-term capital gains can also be reasons. It can also be possible that TDS is not deducted or done at a slighter rate against the tax related to income tax filing.
Is There Any Difference Between Self Assessment Tax and Advance Tax?
Both Advance Tax and SAT are tax liabilities to be payable to the Income Tax Department; however, they are different. Advance Tax refers to the yearly tax liability paid in advance, and SAT is the tax paid by the taxpayer after deducting Advance Tax and TDS. In case, if tax due is more than Rs. 10000 in the financial year, then one has to pay Advance Tax. If not paid Advance Tax, then the taxpayer has to pay penalty cost under section 234B and 234C while filing an income tax return.
Less Tax Paid on Fixed Deposit
Anyone who has invested in a fixed deposit has to pay tax as per the income slab. In a financial year, if the interest on FD is less than Rs. 10000, then there is no deduction on TDS. However, if it is more than Rs. 10000, then TDS is deducted at 10%. Taxpayers have to pay tax on the interest even if they get interested at FD tenure end.
Saving Account Interest More than 10,000
Interest earned on Saving Bank Account refers to as income from other sources declared in income tax returns. There is no TDS deduction from the interest on Saving Account.
How to Compute Self Assessment Tax (SAT)?
If the taxpayer has made payments for tax preceding the assessment date, he/she should follow the below-mentioned processes to calculate interest:
- Advanced Tax amount that has not been paid will be the amount considered for calculating the interest until SAT payment.
- After subtracting the Self Assessment Tax from the Advance Tax will be considered for computation from the SAT paid to date.
To calculate self-assessment tax, one can follow the procedure as provided:
- With the help of the income tax slabs that are available online, calculate the taxable amount to be payable on the total income of the individual.
- Add the payable interest as per Section 234A, 234B, and 234C.
- Deduct the relief amount from the total calculated amount under Section 90 and 90A.
- As per Section 115JAA, subtract the MAT Credit amount from that amount.
- After subtracting the Advance Tax amount, one can get SAT to be payable on the income tax.
What If Taxpayer Does Not Pay Self Assessment Tax?
One should pay Self Assessment Tax before submitting an income tax return. There is no particular date of paying this tax. Procedure for Paying SAT if one fails to pay it before the fixed date:
ITNS 280 Challan is used to pay income tax due charges in case if one fails to pay tax, Self Assessment or Regular Assessment Tax, and Advance Tax.
Offline Payment: The taxpayer can pay this tax by going to the nominated branch and paying through cash or cheque.
Online Payment: One can pay Advance Tax online through net banking.
- To pay online, one should visit the NSDL official website.
- Select ITNS 280 Challan Number
- Select Tax Applicable like (0020) Corporate Tax (Companies)
- Choose Tax Assessment Year. (One should be careful while selecting the Assessment year. For instance, FY is 2019-20 for filing income tax return before December 31, 2020, and income earned between April 1, 2019, to March 31st, 2020. However, Assessment Year for this period is 2020-21.)
- Fill in the payment type like (400) Tax on Regular Assessment, and other details.
- Select the correct AY. If chosen wrong Assessment Year then it will result in demand for the tax amount to get paid for that respective year.
- Fill in the form and then hit on the ‘Proceed’ option
- Fill in the details related to tax, enter the tax amount to be payable, and then confirm
One should break up the tax payable into components like Education Cess, Income Tax, and more. If anyone feels confused about the breakup amount, then they can pay Basic Tax.
Terminology used for Paying Self Assessment Tax
The terminology used for paying Self Assessment Tax is as mentioned below:
- Basic Tax: The tax payable without any income tax interest, cess, and more.
- Education Cess: It is 3% of the Basic Tax.
- Income Tax Interest: It is for those taxpayers who have to fill interest for late payment of Self Assessment Tax or Advance Tax under section 234B and 234C.
- Surcharge: If total income is Rs. 50 lakhs up to Rs. 1 crore then surcharge 10% of income tax. However, if it exceeds Rs. 1 crore, then surcharge 15% of income tax.
- Penalty: It is not applicable for Advance Tax or Self Assessment Tax. If the assessment order is passed and one gets a notice from Income Tax Department, then the penalty is applicable.
- Others: If the taxpayer does not fit into any of the above categories then mark 0 in all sections.
The taxpayer will get a receipt or acknowledgment for the paid taxes when paid through 280 Challan. The receipt involves the details regarding the taxpayer, type of payment done, amount, and Challan Identification Number.
CIN contains information as:
- Date of tax deposit in the format (DD/MM/YY)
- 7-digit BSR code of the bank branch where taxpayer deposited the tax
- Challan Serial Number
What To Do After Paying Self Assessment Tax Through Challan 280?
The taxpayers who paid Self Assessment Tax through 280 Challan should fill in the details in Tax paid. They should ensure that their tax liability is zero before filing for income tax returns. If an individual makes an inaccurate payment for SAT, then the return is considered defective. Taxpayers can sort out their returns within 15 days of filing the return as per the Income Tax Act, 1961. However, if an individual is not able to rectify the error, then the return filed will be stated as defective.
Verification of Self Assessment Tax in 26AS Form
Details related to tax paid are mentioned in Form 26AS Part C. Any of the taxpayers who paid Self Assessment Tax or Advance Tax can find the details in the mentioned section. It is necessary to verify if details are showing up in the form as provided. If any of the details do not match, then contact the bank. Generally, it takes 4-5 days from the day tax is paid.
Conclusion on Self Assessment Tax
The amount an individual is liable to pay on the assessed income from others is self-assessment tax or SAT. The ideal time to pay SAT is as early as possible without waiting for the filing date of tax returns to avoid interest payment.