If you earn income from multiple sources then you need to pay Self-Assessment Tax…

Some of you might wonder, why I need to self-calculate the tax payable amount when my company is already deducting TDS on salary income. Self Assessment tax is applicable when a person earns additional income other than salary and such income is not subject to TDS. While filing the income tax returns we are required to report our total income earned from all sources. Calculation of tax is done on the total income. After we compute the total tax payable it is further deducted with advance tax payments and TDS and the balance amount payable is called self-assessment tax.

Why the need for Self-Assessment Tax?

Earlier, on the income tax portal, there was only one statement called Form 26AS. The purpose of form 26AS was to report the income on which there was tax deducted at source and tax collected at sources. Along with TDS and TCS other information like Tax paid challan details, Tax refund details, Investments under high-value transactions, Purchase of Immovable Property, etc. was also reflected in Form 26AS. With the new income tax portal in place, two new statements were introduced namely: Annual Information Statement-AIS and Taxpayers Information Summary-TIS.

AIS reports the entire income information of a taxpayer i.e. Dividend, Saving Bank Interest, Rent received, Sale and Purchase of shares/mutual funds, FD Interest, Foreign remittances, GST turnover, etc. AIS is a detailed statement.

TIS reports category-wise summarized information. TIS is a summary so it helps with summarized information for quick ITR filing. Information from TIS is generally pre-filled in the ITR forms. Due to already pre-filled information taxpayers can file the e-return with ease.

Due to the introduction of AIS and TIS statements, the income information has been pre-filled in the taxpayer’s e-return, information about advance tax payments and TDS also gets auto-populated and the net tax payable is auto-calculated. For submission of IT return to the IT department such Self Assessed Tax needs to be paid compulsorily.

What will happen if I don’t pay Self Assessment Tax?

The income tax return cannot be submitted unless and until the self-assessment tax is paid by the taxpayer. As per section 140A(3), if a person fails to pay wholly or partly self-assessment tax or interest, then he/she will be treated as an assessee in default in respect of the unpaid amount.

What are the steps for payment of Self Assessment Tax?

The self-assessment tax payment can be done through the following steps :

  1. Go to the website https://www.incometax.gov.in/iec/foportal/
  2. Click on e-pay Tax (refer to Quick links)
  3. Enter PAN, Mobile — Click on Continue
  4. Enter Mobile OTP — Click on Continue — Click on Continue again
  5. Proceed with Income Tax — Click on Proceed
  6. Select Assessment year i.e. 2023-24
  7. Select Type of Payment -Self Assessment Tax (300)
  8. Enter the amount in the Tax column — Click on Continue
  9. You will see multiple payment options now (Netbanking, Debit card, Pay at Bank Counter, RTGS/NEFT, Payment Gateway. Select the payment option accordingly
  10. Now you will see a Preview of the New payment, check and confirm the details — Click on Pay Now
  11. Once you complete the payment follow your banking process. The Tax challan will be available for download. Download the same and save it for record purposes

To conclude on this note, self-assessment tax comes into the picture when a taxpayer earns income from other sources, thus it is the responsibility of the taxpayer to do the tax payment on such income on a timely basis. If the lump sum tax payment creates a financial burden then to avoid paying the entire tax liability in the form of self-assessment at the time of ITR filing, there is always an option of Advance Tax Payment. Taxpayers with better tax planning can pay the taxes in advance on yearly estimated income.

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