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Self Assessment Tax (SAT) refers to the amount that an assessee pays on the requisite income after deducting Advance Tax and TDS for the given financial year. Individuals who are required to file their income tax returns are liable to pay their SAT beforehand. A taxpayer can file SAT by submitting Challan 280, also used for e-filing income tax.  

There is no specific date for paying SAT as it is computed at the end of a financial year. Hence, there is no deadline associated with the payment of such tax. Nevertheless, taxpayers must make SAT payments before filing their respective income tax returns to avoid paying interest on the tax amount. 

Why Should One Pay Self Assessment Tax?

SAT has to be paid by individuals who earn income from other sources. The tax amount is levied for the following reasons:

  • There might be some instances where a taxpayer fails to take an income into consideration while paying advance tax.
  • Sometimes the TDS amount deducted might be inaccurate. 
  • A salaried employee may earn a substantial income from investments such as fixed deposits and mutual funds which may not be known to the employer. 

Hence, self assessment in income tax is essential to avoid inaccuracies in relation to the taxable income. 

Calculation of Self Assessment Tax

SAT can be calculated by using the following formula:

[(B+C) – (D+E+F+G)]

Where, 

B = Total amount of tax payable

C = Interest payable under section 234A/234B/234C 

D= Relief on the tax payable under Section 90/90A/91

E= MAT Credit under Section 115JAA

F= Amount of TDS/TCS

G= Advance Tax 

Please note that interest under Section 234A will only be included in case of late filing of income tax returns; whereas, interest under Section 234B/234C will only be paid in case of late payment of Advance Tax. 

How to Make Payment for Self Assessment Tax Online?

Individuals can make payment for Self Assessment Tax online by following the steps mentioned below:

Step 1: Visit the official website of the Income Tax Department of India. 

Step 2: After signing in, click on the e-Pay taxes option to be redirected to the official website of National Securities Depository Ltd. (NSDL).  

Step 3: Select “Challan no. /ITNS 280” and then choose the “0021 (other than companies)” option.

Step 4: Fill in personal details such as name, address, contact details, PAN card number and more. 

Step 5: Individuals have to select the correct assessment year for which the payment of SAT will be made. 

Step 6: After selecting the assessment year, choose Self Assessment Tax as “type of payment”. 

Step 7: Choose the preferred bank among the list of options available to make the payment. 

Step 8: Post selection of bank, one needs to enter the amount of tax payable. 

Step 9: Individuals will be redirected to the preferred bank’s payment page to complete the payment process. 

Step 10: Following the completion of payment, a challan will be generated, which will contain a detailed representation of the transaction along with CIN and bank name. 

Step 11: It is recommended that taxpayers keep a soft copy or hard copy of the challan for future reference. 

Step 12: The challan details should reflect on the taxpayer’s Form 26AS after a few days. However, in case it doesn’t show, an individual can furnish the details while filing his or her ITR for the financial year.

Results of Incorrect Self Assessment

If an assessee makes inaccurate self-assessment of income and tax amount payable, the return might be considered defective. Presently, the provisions of the Income Tax Act, 1961 allow taxpayers to sort out their returns within 15 days of filing the return. Nevertheless, if an assessee fails to rectify the errors, the filed return will be declared defective. 

Difference between Self Assessment Tax and Advance Tax

Both SAT and Advance Tax are paid to the Income Tax Department of India as per the provisions of Income Tax Act, 1961. Although these are tax liabilities paid to the Government of India, they are both different from each other. 

Basis of Comparison  Advance Tax Self Assessment Tax
Definition Advance Tax refers to a part of the yearly tax liability that is paid in advance by a taxpayer.  It is the tax amount that is paid by an assessee on his or her assessed income after deducting TDS and Advance Tax.
Due date  The due date of paying Advance Tax is based on the amount of tax amount payable.   There is no due date associated with the payment of SAT. However, it has to be filed before the income tax return filing date.
Who can pay? Both salaried employees and self-employed individuals with a tax liability of more than Rs. 10,000 in a financial year are liable to pay Advance Tax.    SAT is the tax amount an individual is liable to pay in relation to his or her income from other sources. 
Amount of tax payable Amount of Advance Tax payable for self-employed individuals and business owners is different from that of companies.  The amount of Self Assessment Tax payable is calculated using a separate formula and does not differ like in the case of Advance Tax. 

Now that you have a clear idea about what is Self Assessment Tax, you make an effort to pay it off as soon of possible without waiting for the income tax return filing date.

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