BAJAJ BROKING
August 28, 2024
5 mins read
Self assessment is an additional tax paid after deducting TDS and advance tax, if the taxpayer has an additional income that has not been taxed. SAT is a mandatory tax and works as a prerequisite for filing income tax returns. Learn more about SAT along with its calculation methods and online filing process.
Self-assessment tax is what a taxpayer has to pay after deducting TDS/TCS and advance tax. To simplify it, a taxpayer who has duly paid his TCS/TDS and advance tax for the given financial year, and if an extra liability is found then the taxpayer has to pay a tax and the same is paid through self-assessment tax.
Unlike TCS/TDS and advance tax, there is no stipulated date to pay self-assessment tax. A taxpayer has to pay SAT for each financial year at any time before filing for ITR. The SAT payment is simple, as it can be through challan 280 - the same window used for online income tax filing.
As a taxpayer, you might wonder why you have to submit the Self assessment tax return if you have already done your part by paying TDS and advance tax. The simple answer is that as per the assessment of the Income Tax department, you are found earning additional income that has not come under TDS or advance tax.
Here’s a list of situations where paying a self-assessment tax is necessary
The assessment done to pay advance tax was inaccurate resulting in the undermining of any additional income
TDS calculation was not done accurately by evaluating all types of income
A taxpayer who is a salaried employee might have additional income through investments or trade that did not make it into his income list while determining TDS and advance tax
These are the situations under which a taxpayer has to pay SAT. Remember that any tax exemption promised through investments and trade is taken into consideration before calculating SAT liability.
Paying SAT is a simple online process that can be done through the official website of the Income Tax department. There is a separate window for SAT that can guide you through the form for filing SAT. However, to make the process of self assessment tax payments simpler, here’s a stepwise guidance to help you out:
Step 1: Visit the official website of the Indian Income Tax Department and sign in to your account.
Step 2: On the screen, you will be able to locate the e-Pay tax option. Open the portal and you will be redirected to National Securities Depository Ltd.
Step 3: On the NSDL website, select Challan Number 280 to open an application form.
Step 4: Fill in the form with your details and select the financial year for which you want to pay self assessment tax for.
Step 5: From here, you can find the Self Assessment Tax (SAT) option for choosing the type of payment method. Next, you will be asked to select the bank through which you want to make the payment.
Step 6: Make the payment and you will be provided with a challan bearing details of your payment. Make sure to keep a copy of this Challan for future tax purposes.
The Challan generated after paying SAT bears important details including Form 26AS. If you don’t find the said details, wait for a few days or you can get the details while filing ITR for the next financial year.
Calculating SAT is a simple process that can be done by a taxpayer using the said formula:
[{B+C) – (D+E+F+G}]
Here’s what the formula stands for:
B is the total amount of tax payable, C stands for Interest payable under section 234A/234B/234C, D is Relief on the tax payable under Section 90/90A/91, E= MAT Credit under Section 115JAA, F= Amount of TDS/TCS and G is Advance Tax.
Now that you have understood the concept of Self Assessment Tax, you have a clear picture that it is a mandatory tax that has to be paid before filing income tax returns for the financial year. In case you have failed to pay the SAT or have miscalculated your SAT, the income tax returns you file will be declared defective leading to multiple tax complications and penalties.
You can refer to section 139 (9) of the Income Tax Act, to examine the provision carefully.
Advance tax is different from a self assessment tax as the former talks about an advance payment done against your tax liabilities allowing you to pay as you earn to avoid the burden of making a big payment at once. Apart from the fundamental difference, an SAT differs from an advanced tax in multiple other ways. Take a look at the table for a clear understanding:
Basis of Comparison | Advance Tax | Self Assessment Tax |
Meaning | Advance tax is the tax paid in advance against the yearly tax liability instead of paying a huge amount on a fixed date. | Self assessment tax is the liability on a taxpayer after deducting TDS/TCS and advance tax. |
Due Date | The due date for paying an advance tax is not fixed and varies depending on the amount payable. | There is no due date for paying SAT. However, it needs to be done before filing the income tax return. |
Who is liable to Pay? | Any person with an income who has a tax liability of more than ₹10,000 in one financial year. | Any person who has an additional income that has not been taxed under TDS or advance tax. |
Amount of Tax Payable | Amount payable is not fixed as it depends on the income. | Amount payable can be determined using the formula:[{B+C) – (D+E+F+G}]. |
Being a resident within the territorial jurisdiction of India, you are guided by the rules of the Income Tax Act that impose a duty on you to pay taxes. Self assessment is a kind of tax that ensures a tax liability on your income generated through additional means that did not make a part of your TDS or advance tax. The process of paying a Self assessment tax return is simple and can easily be done through the official website of the Income Tax department.
To avoid getting into tax troubles and huge penalties, make sure that you pay your taxes before the deadline.
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To assess whether you need to file for an SAT return, you have to evaluate your income from all sources and check whether there is an additional income that has not been taxed under TDS/TCS or an advance tax.
Unlike a TDS, there is no specific date or deadline to submit a self-assessment tax return. However, it is mandatory to submit a SAT return before filing for the next Income tax return.
Visit the official website of the Income Tax Department and log in to your profile to find the e-filing window. From here, you will be redirected to the NSDL website which gives you the option of choosing SAT as a type of payment. Select the option, choose the financial year for which you want to file SAT and make the payment.
For SAT purposes, you must keep all your income and tax documents including business records, payee records, invoices, ITR receipts of the previous year etc.
Yes, you can claim expenses against self assessment tax including medical, educational, investment or other such expenses.
Submitting your SAT return is mandatory to file your ITR. In case, you are liable to file a self-assessment tax return and you have made a calculation mistake or failed to submit an SAT return, your income tax return will be declared defective.
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