Self-Assessment
Introduction
Self-assessment requires an assessee to compute taxable income and tax liability before filing the Income-tax return. Failure to discharge this obligation may result in being treated as an assessee-in-default.
Computation of Income and Tax
Self-assessment involves calculating total income under the five heads of income:
- Salary
- House Property
- Profits and Gains of Business or Profession
- Capital Gains
- Income from Other Sources
Total income is determined after setting off losses, clubbing income, and claiming deductions under Sections 80C to 80U. The computed tax liability includes:
- Tax at normal or special rates
- Rebate undersection 87A(if applicable)
- Surcharge and Health & Education Cess
- Deductions for relief underSection 89, MAT/AMT credit, and foreign tax credit
Prepaid taxes such as TDS, TCS, and Advance Tax are deducted from the total tax liability. Interest under Sections 234A, 234B, and 234C and late filing fees under Section 234F are added, if applicable.
Payment of Self-Assessment Tax
- Self-assessment tax can be paid even after filing the return.
- Companies and assessees liable for tax audit (Section 44AB) must pay tax electronically.
Credit for Tax Paid
If the amount paid falls short of the liability, it is adjusted in the following order:
- Fees and interest
- Balance tax payable
Consequences of Non-Payment
- Non-payment of self-assessment tax results in being treated as an assessee-in-default.
- The tax authorities may initiate recovery proceedings.
- Penalties may be imposed for non-compliance.