Characteristics of self-assessment tax

It is important to remember that after a taxpayer has paid their advance and if there are any tax dues which need to be paid after the end of the financial year, they have to be paid as self-assessment tax.

A taxpayer before filing his or her income tax return is required to pay the self-assessment tax. In the case of salaried taxpayers, the fee is calculated and settled on the taxpayer’s behalf by the employer. If a taxpayer is liable to pay self-assessment tax, they will not be able to file their income tax returns unless they have paid the self-assessment tax. The self-assessment tax needs to be evaluated by the taxpayer on their terms, and then it has to be settled with the government. There are various ways a taxpayer can settle their self-assessment tax, which can be done both offline and online. Both the processes have to be carefully followed, as any discrepancy can lead to significant issues in the return form and processing of the return.


Computing Self-assessment tax

Self-assessment tax is to be calculated by subtracting all available tax credits, that is advance tax, TDS, MAT/AMT, TCS, credit, and relief existing under section 87A/90/90A/91. The taxpayer is required to give self-assessment tax along with the interest and payment if any has been levied. There is an additional fee owed from the Assessment Year 2018-19 for the delay in filing of the ITR. A late filing payment of Rs 5,000 shall be imposed if the return is filed between August 1, 2018, and December 31, 2018. The fees will be Rs 10,000 if the tax return is filed between January 1, 2019, and March 31, 2019. The late filing fees will be Rs 1,000 for taxpayers whose taxable revenue is up to Rs 5 lakh. This fee can be imposed only if the taxpayer is required to show their return of income. The tax, along with interest and payment needs to be paid before displaying the return, and the particulars of the tax payment are mandatory to be shown in the income tax return form.

For computing the self-assessment tax, a taxpayer needs to follow the steps as listed below closely

PARTICULARS AMOUNT
Tax Payable on Total Income ——-
Add- Interest under Section 234A/234B/234C ——-
Minus- Relief under Section 90/90A/91 ——-
Minus - MAT Credit under Section 115JAA ——-
Minus - TDS/TCS ——-
Minus - Advance Tax ——-
Tax to be paid Total Amount

Partly paid Self-Assessment Tax

In case the tax paid is not in full, the amount which a taxpayer pays should first be adjusted towards the interest payable and the balance towards tax. Let us understand this with the help of an example:

Income Tax     2,00,000
(Add) Interest under Section 234A/B/C 30,000
(Less) TDS and Advance Tax 50,000
Self-Assessment Tax to be paid under Section 140A 1,80,000
Amount paid as Self-Assessment Tax 70,000

How to Calculate the Interest for Computing Self-assessment Tax

If the amount for taxes is calculated before the evaluation date, the interest can be estimated by including the amount of advance tax which has not been returned, which is the value that is supposed to determine the consequences for the date unto the amount of the self-assessment tax. A different way of doing this would be deducting the self-assessment tax from the advance tax sum to be recognised for calculation from the time the adjustment of the self-assessment tax has to be performed.


Procedure for Payment of Self-Assessment Tax

The taxpayer can make the return online or physically at the sanctioned banks. Here are the steps for the online amount of Self-Assessment Tax that can be followed:

  • Step 1: Log on to https://www.incometaxindiaefiling.gov.in
  • Step 2: Tick on ‘e-Pay Tax’ from choices accessible below the ‘Quick Links’ menu label.
  • Step 3: Tick on ‘Continue to NSDL Website,’ it will begin a new web page for the choice of the Challan variety.
  • Step 4: Pick Challan No. ITNS 280 (Payment of Income tax & Corporation Tax).
  • Step 5: Enter Tax relevant, PAN, Assessment time, Address and kind of return as ‘(300) Self-Assessment Tax’.
  • Step 6: Choose the method of return; the taxpayer can return self-assessment tax by two methods ‘Net Banking’ & ‘Debit Card.’
  • Step 7: Insert the captcha key and tick on continue.
  • Step 8: On approval of the information that has been inscribed, the taxpayer will be steered to the payment gateway of the bank.
  • Step 9: On making the payment successfully, a challan certificate will be revealed including CIN, fee particulars, BSR Code, challan serial character, and bank name via which e-payment has been made.
  • Step 10: The Challan is evidence of tax payment being executed. Download and Preserve the challan print for the forthcoming article.

Offline process

If the taxpayer is inadequate to perform tax payments online, then they have the opportunity to pay offline by visiting their bank branch. The taxpayer can follow the actions below to make their return offline.

  • Go to the bank branch and request for the relevant tax payment challan form, in this case, Challan 280.
  • Supply the specifications as required in the form. The offline mode is comparable to the one displayed on the online platform, that is, on the TIN-NSDL portal. The features needed in the form are also very much identical.
  • Go to the appropriate bank’s table and present the filled-in Challan 280 form simultaneously with the money. The taxpayer can make a tax refund either in cash or cheque. Nevertheless, the bank may be hesitant while receiving substantial cash returns; therefore, re-paying via cheque is desirable. Also, it is simpler to track and retain a document of the payment made by the taxpayer. If the taxpayer wants to make the payment via cheque, name the cheque in courtesy of “Income Tax Department.”
  • Bank executive will accept the money and challan from the taxpayer and give them a voucher by cutting off a part of the challan, inputting in aspects of payment and impressing it.

Once the taxpayer has paid their taxes, they should save the slips securely as evidence of payment. After giving the fee, it can exert up to ten days to show in the Form 26AS. The taxpayer's income tax payment should display in their Form 26AS as ‘Advance tax’ or ‘Self-assessment tax’ or the kind of tax given.

Challan status inquiry

As soon as the taxpayer has made the tax return, they can verify its state on the TIN-NSDL portal. To verify the state, heed to the listed actions:

  • On the TIN-NSDL portal, tick on 'Services' and choose 'Challan Status Inquiry.'
  • The taxpayer will be taken to a different page. On that new tab, below the 'For Taxpayers' title, select 'CIN based view.' Identify yourself as a taxpayer, and the taxpayer can utilise only CIN based aspect to perceive the state of the tax returned by them.
  • The taxpayer will be compelled to communicate a few articles from the challan slip, i.e., BSR key of the collecting office, challan tender time, and challan serial number. Insert the captcha cryptogram and agree on show.
Considering it takes 5-10 days to refresh the status, it will display any of the three outcomes:
  • No records: This indicates that the bank is yet to transfer the tax refund to the income tax office.
  • Price Matched: This implies that the bank has transferred the tax refund to the income tax office, but the office has yet to confirm it.
  • Accepted by TIN: It implies that the income tax office has obtained the tax payment. It will dispense the date on which the payment was collected.

How to Re-print Challan 280

In case the taxpayer has lost their challan slip, they can download the identical by logging in to their net banking account (if the refund was made by net banking). To download the identical, the taxpayer has to login to their account via net-banking, go to the tax centre and agree on 'reprint challan' to do the corresponding. On the other hand, if the taxpayer has made the fee offline either via cash/cheque or online by a debit card, then they are expected to communicate the same to the bank's branch.


Form 26AS & Self-assessment Tax

Usually, each actuality (individual or company) that has subtracted taxes must attribute that value to the administration via banks. Banks need to upload these TDS features into the Tax Information Network (TIN) central system. The deductors, side-by-side, would record quarterly reports to TIN, implementing quarterly TDS items. Based on specific circumstances, the TIN central system coordinates information linked to tax payment before transforming into a comprehensive record for the particular PAN. This is Form 26AS.

Mainly, Form 26AS report presents an amalgamated picture of the total revenue received by the taxpayer as a deductee from multiple sources. It also involves the TDS/ TCS sum that has been subtracted from their assets and recognised to the Income Tax Department.


Reasons for mismatches between TDS statement and Form 26AS

There are numerous circumstances where the TDS knowledge in the TDS statement and accordingly in Form 16 or 16A may diverge from what is accessible in Form 26AS. Most frequent causes for such discrepancy are listed here:

  • Non-fulfilment of the deductor to pledge TDS on time
  • The incorrect value contained in the TDS return
  • Incorrect PAN cited in the TDS return
  • A blunder in the CIN (Challan identification number)
  • The deductor’s PAN/TAN improperly incorporated
  • Error in the preferred taxable year
  • Imperfections in the TDS return
  • Unfinished details of the taxpayer in the TDS return
  • Mismatch in the TDS cited and the original TDS subtracted

Correcting mismatches: More frequently than not, such mismatches can be associated with the incorrect information furnished in the TDS return. So, kindly request the employer/deductor to file an amended TDS return after performing the essential changes.

The Income Tax department permits the taxpayer to notify the idea for a mismatch on the website in response to a notice posted by the department.

Outcomes of a mismatch: Automated ITR processing income tax returns has caused it more straightforward to distinguish matches in Form 26AS and TDS reports. The income tax website includes links that would give admittance to 26AS, enabling the taxpayer to check and cross-check the features. Hence, kindly assure that TDS details in TDS reports and Form 26AS match to circumvent the subsequent outcomes:

  • With the pre-fill convenience made possible in the tax portal and services, all the information accessible in the 26AS is instinctively being filled in the ITR. In the case of mismatches, the value pre-filled will mismatch with the original computations.
  • The elimination of records by the deductor will appear in the taxpayer is not receiving credit for taxes subtracted, and this could end up in a tax owed situation.
  • There will be a setback in preparing the income tax return of that particular taxpayer.
  • Declaration of payment of extra fee subtracted will linger further than required.

Frequently Asked Questions

Q- What if the deadline is missed for the payment of tax?

If you fail to pay or the amount you’ve paid is less than the mandated 30% of the total liability by the first deadline (15 September), you will need to pay an interest. This is computed @ 1% simple interest per month on the defaulted amount for three months.

The same interest penalty would apply if you fail to pay the second deadline (15 December). Failing to pay the third and last deadline (15 March) would mean paying 1% simple interest on the defaulted amount for every month until the tax is fully paid.


Q- What are the deadlines for sending my Self-Assessment Tax Return?

If you are submitting a paper return, it must reach HMRC by midnight on the 31st October. If you decide to send your tax return online, it isn’t sure until midnight on the 31st January.

You will be charged a penalty if your Tax return isn’t received on time. When you send HMRC a Self-Assessment tax return, you will receive a Self-Assessment statement showing what tax you owe and how to pay. If you have paid too much it will show how much you will be repaid. If you file your Tax Return online, you can view this before you even receive it in the post.


Q- What forms are included in a Self-Assessment Tax Return?

Self- Assessment Tax Returns are designed to be relatively straight forward, although most people opt to use an accountant. The forms you need to fill in if you are self-employed are as follows:

HMRC will send you a tax return- or a letter telling you to file online, every year in April. This relates to the previous tax year; from the 6th April to the following 5th April. If you receive a tax return,

HMRC will always send you form SA100 and SA101. You may also have to file in some supplementary pages, depending on your circumstances


Q- Do I need to complete a Self Assessment Tax Return?

If you do not pay PAYE i.e. are not a permanent employee you’ll need to fill out a self-assessment tax return. Also if you have a second income from overseas income, you’re a landlord or you have income from savings or investments. In a nutshell if you have any income that HRMC needs to know about you need to fill out a self-assessment form.


Q- How is the interest calculated for computing self-assessment tax?

If the payment for taxes is made before the assessment date, the interest can be calculated in the following manner: the amount of advance tax which has not been paid is the amount that is considered to calculate the interest for the date until the payment of the self-assessment tax. Another way of working this would be subtracting the self-assessment tax from the advance tax amount in order to be considered for computation from the time the payment of the self-assessment tax has to be made

CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.