March 07 , 2013
Most salaried people would assume their income tax liability is totally taken care of because their company applies TDS. But this need not be the case. If you own more than 1 house, have redeemed mutual fund investment, sold shares or have income from business you still have income tax to pay on these. Self assessment tax is paid to clear all your income tax dues of the previous financial year.
What is self assessment tax?
There are 2 ways in which you pay direct tax to the government as you earn. The common way- and the only way most people do- is TDS and the other one is Advance tax.
Advance tax is to be paid if TDS does not apply on some part of your income that is legally taxable. Examples are capital gains on redeeming mutual fund units or shares, income from house property, profit from profession or business. For more on this read Concept on Advance Tax in Knowledge page.
Usually you would do this while filing Income Tax Returns for the previous year. Self assessment tax can only be calculated after the end of the financial year, when you know your exact income in the previous year. Since you proactively assess and pay this tax it is called Self Assessment Tax. Perhaps also because it is paid in the assessment year and not the financial year where income was created.
Computing self assessment tax
In the assessment year following the previous year (for 2012-13 the assessment year is 2013-14) find out how much was your total tax liability on income from various sources like salary, interest, capital gains, house property and business.
Now figure out how much tax was paid as TDS on salary, interest from FD, etc. If you have paid Advance tax add it as well. You can check Form 26AS online to know your TDS and Advance tax payment credit in I-T accounts.
If it turns out that you have paid less tax you are liable to clear up the due, with interest if applicable on delayed advance tax, by paying self assessment tax.
Challans, forms and due date for Self Assessment tax
Self assessment tax can be paid any time on or before due date of filing Income Tax Returns, which usually falls on 31st July. You can pay self assessment tax online by filling form 280 at https://onlineservices.tin.nsdl.com/etaxnew/tdsnontds.jsp.
Alternately you can download Challan ITNS 280 and submit the filled form along with cheque or cash at any bank that makes income tax payment. You will be given a counterfoil with a unique acknowledgement number CIN. CIN has to be quoted while filing income tax return.
Step by step procedure of paying self assessment tax online or through bank is covered in Procedures in Knowledge section.
Take an advice- don't skip taxes!
If it is just a few thousands, skipping it might not come under I-T scanner and they might never spend time, money and efforts on hunting down those who mess with small tax amounts. Nevertheless the I-T department is going fully web-based and in a matter of a few years the entire tax system would be made online for all sorts of assessees. It will be easier to crack down on defaulters then and if they wish they can take action retrospectively.
Even so we must pay taxes not for fear of consequences but simply because we know it is the right thing to do. Be a good citizen and do your part in helping the government function by paying your taxes. And as much as you can afford keep your eye open for what it is doing with your money!