INDEX
- Self Assessment Tax (SAT)
- Why is SAT Required?
- Calculation of SAT
- How to Pay SAT Online
- Consequences of Incorrect Self Assessment
- Difference Between SAT and Advance Tax
Self Assessment Tax (SAT)
What is Self Assesment Tax?
Self Assessment Tax (SAT) refers to the tax that a taxpayer pays on their income after considering the advance tax and TDS (Tax Deducted at Source) paid during the financial year. It is the tax amount due after assessing your total income and deducting the taxes already paid. SAT must be paid before filing the income tax return to avoid interest penalties.
Why is SAT Required?
SAT is necessary for individuals who earn income from other sources and have additional tax liabilities. Reasons for paying SAT include:
- Incomplete Advance Tax Payments: If an individual fails to account for all sources of income while paying advance tax.
- Incorrect TDS Amount: If the TDS amount deducted is inaccurate or insufficient.
- Income from Investments: If a salaried person earns income from investments like fixed deposits or mutual funds, which their employer may not be aware of.
Calculation of SAT
SAT is calculated using the following formula:
SAT = (B + C) – (D + E + F + G)
Where:
- B = Total tax payable
- C = Interest under Section 234A/234B/234C
- D = Relief under Sections 90/90A/91 (for foreign tax credits)
- E = MAT (Minimum Alternate Tax) credit under Section 115JAA
- F = TDS/TCS (Tax Deducted at Source/Tax Collected at Source)
- G = Advance Tax paid
Note: Interest under Section 234A is applicable in case of late filing of the return , while Section 234B/234C interest applies for late advance tax payments @rate of interest is 1% per month or part thereof for sec 234A,234B,234C.
For more details on Sec 234A, 234B, 234C
How to Pay SAT Online
Follow these steps to pay SAT online:
- Visit the Income Tax Website: Go to the official website of the Income Tax Department of India.https://www.incometax.gov.in/iec/foportal/
- Login and Navigate: After logging in, click on the “e-Pay taxes” option, which will redirect you to the National Securities Depository Limited (NSDL) website.
- Select Challan: Choose “Challan no. /ITNS 280” and select “0021 (other than companies)” as the payment category.
- Fill Personal Details: Enter your name, address, PAN card number, and other details.
- Select Assessment Year: Choose the correct assessment year for which SAT is being paid.
- Choose Type of Payment: Select “Self Assessment Tax” as the type of payment.
- Select Bank: Choose your preferred bank from the list provided.
- Enter Tax Amount: Enter the amount of SAT due.
- Complete Payment: You will be redirected to the bank’s payment page. Complete the payment.
- Save Challan: Once the payment is complete, a challan will be generated, which will include a CIN (Challan Identification Number) and the bank’s details. Save the challan for your records.
- Check Form 26AS: After a few days, the challan details should appear in your Form 26AS. If not, you can manually provide the details while filing your Income Tax Return.
Consequences of Incorrect Self Assessment
If an individual makes an incorrect self-assessment, it may lead to a defective return. However, as per the Income Tax Act, the taxpayer can rectify the errors within 15 days of filing. If not rectified, the return will be considered defective, and penalties may apply.
Difference Between SAT and Advance Tax
Though both SAT and Advance Tax are paid to the Income Tax Department, they serve different purposes:
- Advance Tax: This is the tax paid in installments during the financial year based on the estimated income. The due date for paying advance tax depends on the total tax payable.
- Self Assessment Tax: This is paid when filing the income tax return, after considering all deductions like advance tax and TDS. SAT has no specific due date, but must be paid before filing the tax return to avoid interest charges.
Key Differences:
Aspect | Advance Tax | Self Assessment Tax |
Due Date | Paid in installments throughout the year | Paid before filing the income tax return |
Who Pays | Individuals and businesses with tax liability > Rs. 10,000 | Paid by individuals based on final income and deductions |
Tax Payable | Paid based on estimated income | Paid on income after considering all taxes paid |
Applicability | For income from salary, business, etc. | For income from other sources, after deducting TDS and advance tax |
Conclusion:
Self Assessment Tax is a crucial part of the tax compliance process. It ensures that the taxpayer has correctly assessed and paid their tax dues before filing their Income Tax Return. By paying SAT, taxpayers can avoid penalties and interest charges while ensuring that their tax liabilities are accurately met.