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How to pay Income Tax online

Most of us always question ‘Why should I pay tax?’ in spite of paying tax for food, house, travel, medical treatment etc. We often compare India with countries like USA or UK where people get social security as well as medical facilities virtually without any cost. Yet, we often forget that the Indian Government has been a Good Samaritan which has provided us with government hospitals, education in municipal and government schools etc. at very low cost. Besides, taxes are an extremely crucial tool in 'Nation Building'. The money collected in the form of tax is used for nation building activities like infrastructure, health, defense, education, and other vital sectors. Therefore, it is imperative that all salaried citizens pay tax on time.

However, majority of people find paying tax as a troublesome process both financially and effectively. Therefore, to help people with this problem the Income Tax department has made provision to pay income tax online through 'Self-Assessment Tax'. Let us understand self-assessment and the procedure to pay income tax online.

What is Self-Assessment Tax?

You must calculate the final liability of income after deducting the TDS amount from advance tax payable, for the financial year and for the income source. At the year end, if there is any tax pending before filing an income tax return, then the final amount that the individual is liable for is calculated, which is known as the self-assessment tax.

Why should you pay Self-Assessment Tax (SAT)?

SAT is payable by individuals who generally have income from other sources. For instance: if you missed mentioning an income while making the final payment in the form of installment of advance tax. Or there could be a possibility that TDS was not deducted or done at a lesser rate against the higher tax rate applicable on your income tax filing. Also, there are chances with salaried individuals that the income they earn through fixed deposit or the short term bonds is not mentioned to the employer and hence, that amount is not considered for a tax deduction. In such scenarios self-assessment tax will be required. The right time to pay tax is as soon as possible and before the tax filing date as a way to avoid payment of interest on the tax amount.

How to pay Income Tax online?

Following steps will help you with the online Self – Assessment tax procedure.

  • Step 1: You can log on to the official website of Income tax department i.e.: www.incometaxindia.gov.in

  • Step 2: After signing-in an option for “e-Pay taxes” is visible.

  • Step 3: You will then be directed to the National Securities Depository Ltd (NSDL) website.

  • Step 4: You can select challan no /ITNS 280 followed by (0021) Income tax (other than companies).

  • Step 5: You will need to fill in details such as PAN card, name, residential address, email address and mobile number.

  • Step 6: Select the appropriate year for assessment that you will be making the payment for.

  • Step 7: Post the year of assessment, you select the “type of payment”, which in this case will be “(300) Self-Assessment Tax”.

  • Step 8: You can then choose the bank for payment from the drop-down menu available.

  • Step 9: You will then have to enter the ‘tax payable amount’.

  • Step 10: After making the payment, a challan will be displayed and this will include CIN and payment details along with the bank’s name through which the payment has been made.

Note: One has to keep certain things in mind while paying dues i.e.:

  • It is important to enter the correct PAN number.

  • It is essential to double check if the form is correctly filled.

  • The challan generated after the tax reduction must be kept safe if required by the income tax in future or you can keep a hard copy.

Self-Assessment Tax Calculator

In case you have made any payments for tax before the assessment date, then you can consider the following two processes for interest calculation.

  • The advance tax amount that has not been paid is the one considered for computing for interest for the date up to the payment of the self-assessment tax.

  • The advance tax amount after deducting the self-assessment tax will be considered for computing from the date the payment for self-assessment tax has been made.

You can follow the procedure mentioned below for computing self-assessment tax.

  • Calculate the taxable amount payable on the individual’s total income. You can do this with the help of income tax slabs available online.

  • Add the interest that is payable under section 234A/234B/234C.

  • Once you finish adding the amount, subtract the relief amount under Section 90/90A/90 from the total.

  • Further, you may subtract the MAT Credit amount under Section 115JAA.

  • Then subtract the advance tax amount.

Advantages of paying Income Tax online

  • Convenience: Everyone has the convenience of paying online at any time (24*7)

  • You can pay on behalf of the company, firm, and others from anywhere in the country.

  • One may get an immediate acknowledgement of payment in form of a challan.


What happens if you fail to pay income tax?

If you fail to pay your income tax, the IRS (Indian Rupee Service) will charge you a failure-to-pay penalty. And the penalty is 0.5 percent of your unpaid taxes for each month you don't pay, up to 25 percent. In addition to that, you'll owe interest on the unpaid amount.

What happens if you forget to file taxes?

In case you forget to file taxes, you'll be subject to the failure-to-file penalty, which apparently amounts to 5% of your unpaid tax bill for every month your tax bill remains unpaid after the April deadline, up to a maximum of 25%. Also, the IRS in the meantime will send you several reminders to file tax.

Can you go to jail for not paying taxes?

Yes, you can go to jail for not filing your taxes. However, if the committee finds the reason behind you not paying tax is genuine, you may not end up going to jail.

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