Self Assessment Tax: Meaning, Calculation, How to Pay Online & Tax Example
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  • Investors


India has almost 8 crores tax filers. Every individual needs to calculate their total tax liability on the taxable income after adjusting the available deductions and exemptions and after setting off the eligible losses, if any, of the previous or current year. Such tax payable is collected by the government in three different ways:

  • Tax Deducted at Source (“TDS”)/Tax Collected at Source (“TCS”);
  • Advance tax; and
  • Self-assessment Tax.

Here in this article, we will understand the different aspects of self-assessment tax – such as its meaning, how to compute the same, the procedure for payment of self -assessment tax liability and consequences of non-payment of self-assessment tax.

Meaning of Self- Assessment Tax?

Self-assessment tax means the tax payable by a taxpayer at the end of the financial year after reducing the TDS/TCS and advance tax. In simple terms it means, if during the financial year, it is found that any person has a tax liability after factoring in the TDS/TCS and advance tax paid, then such additional tax liability must be paid to the government by way of self-assessment tax.

Need for Self- Assessment Tax

Now that the meaning of self-assessment tax is clear, one may wonder that despite the taxpayer having paid the TDS and Advance tax in entirety, why the need for self-assessment tax arises? Please find below some of the reasons that may lead to self-assessment tax liability.

  • The taxpayer has omitted to estimate certain income while computing the advance tax payable.
  • The taxpayer has received some unexpected gains or income from other sources which were not subjected to TDS.
  • The TDS was not deducted or was deducted at a lower rate than applicable.
  • Where a salaried individual has changed jobs, and the current employer inadvertently did not consider the salary received from the previous employer.
  • Interest liability on account of short payment/ Non-payment/ Deferment in payment of Advance Tax

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How to pay Self-Assessment Tax Online?

Option A: Without logging in to the income tax portal:

  • Step 1: Go to the e-Filing’ and under ‘Quick Links’, select ‘e-Pay Tax’.

    Step 1- Go to the e-Filing portal

  • Step 2: Fill up PAN details and complete the OTP verification with the mobile number and click on ‘Continue’.

    Step 2- OTP verification to pay self assessment tax online

  • Step 3: After OTP verification, a success message with your PAN and masked name will be displayed. Click on ‘Continue’ to proceed.

    Step 3- Click on Continue to proceed to pay self assessment tax

  • Step 4: Click on ‘Proceed’ under the window ‘Income-tax’.

    Step 4- Click on Proceed under the window Income-tax
  • Step 5: Select assessment year and Type of payment (Minor head) as ‘Self-Assessment - Tax (300)’ and then click on 'Continue’.

    Step 5- Select assessment year and Type of payment -Minor head- as Self-Assessment - Tax -300-

  • Step 6: Fill in the accurate details of tax payment under the relevant categories and click on ‘Continue’.

    Step 6- Fill in the accurate details of tax payment

  • Step 7: In the Select Payment Mode page, select the payment mode (Net Banking/ Debit Card/ Payment Gateway) from the options given under online payment and click on ‘Continue’.

    Step 7- select the payment mode to pay self assessment tax

    Kotak offers you a simple and seamless way to make such direct tax payments in a hassle-free manner. You can use Kotak Net Banking (if you are a Kotak customer) or the Kotak Payment Gateway (if you are not) to make your tax payment on time.

  • Step 8: Preview and verify the details and then click on ‘Pay Now’ to make the tax payment or edit the details in case of any error and thereafter verify the details again and click on ‘Pay Now’.

    Step 8- click on Pay Now to make the tax payment

  • Step 9: Tick the checkbox after previewing the terms and conditions and thereafter click on ‘Submit to Bank’ to continue with the payment. Based on the payment mode selected, you shall be redirected to the respective webpage for completing the payment transaction.

    Step 9-  click on Submit to Bank to continue with the tax payment

  • Step 10: Once payment is complete, the Challan Form (CRN) will be generated successfully. Download the Challan Form (CRN) for your records and for completing the return filing process.

    Step 10-Download the Challan Form -CRN- for your self assessment tax payment records

Option B: Post logging in to the income tax portal:

Alternatively, you can also make the tax payment by logging in to your income tax portal by following the below given steps –

  • Step 1: On the home page of the e-filing portal of the Income tax department, click on ‘Login’ and thereafter enter your income tax e-filing login credentials.

    Step 1- click on Login on home page of the e-filing portal

  • Step 2: On the Dashboard, under ‘e-File’ select the option ‘e-Pay Tax’.

    Step 2- under e-File select the option e-Pay Tax to pay self assessment tax

  • Step 3: On the ‘e-Pay Tax’ page, click the New Payment option to initiate the online tax payment.

    Step 3- click the New Payment option to initiate the online self assessment tax payment

  • Step 4: On the New Payment page, click on ‘Proceed’ under the window ‘Income-tax’

    Step 4- click on Proceed under the window Income-tax

From here on, please follow Step 5 to Step 10 (as given above in Option A) to complete your tax payment online.

Note: After successful payment, you will receive a confirmation email and an SMS on the email ID and Mobile number registered with the e-Filing portal.

What are the consequences of non-payment/part-payment of Self- Assessment Tax?

Income-Tax Return may be considered as defective Return:

It is advisable to pay self-assessment tax on or before filing the Income-tax return. Any Income-tax return filed without payment of self-assessment tax may be considered as a defective return.

Imposition of penal consequence:

If a person fails to pay either wholly or partly self-assessment tax, he may be treated as “assessee-in-default” in respect of the unpaid tax amount and he may be held liable to pay penalty of an amount as the assessing officer may impose at his discretion. However, one may note that the total amount of penalty cannot exceed the amount of tax arrears.

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This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.