Why you should pay your self assessment tax and file the ITR on time

What is self-assessment? Self-assessment tax is the difference between the actual tax payable and what has been already paid during the year through advance tax and tax deducted at source. This needs to be paid before filing of income tax returns for a particular year, otherwise the taxpayer is considered an “assessee in default”. When do we need to pay self-assessment tax? The due date for payment of self-assessment is 31st March for a particular financial year.  However assesse can pay self-assessment tax even after 31st March. There is no provision made by the department, regarding the last date of payment of self-assessment tax. As an incentive for the assesse to pay self-assessment tax on time the department has imposed certain interest rates no payment after 31st March. What happens if we don’t pay self-assessment tax on time? As discussed in the previous section, on late payment of self-assessment certain interest will be levied on the assesse. Interest under section 234a, 234b, 234c, would be levied. The interest rates are 1% per month or part of the month. This would sound to be very small, but it’s not. Imagine a situation, when interest under all 3 sections is levied. The interest could pile up to be equal to the actual tax liability in a short period of time.  We provide service with respect to payment of self-assessment tax and filing of IT Return- Please click here to know more. What about penalties? The Income tax act does not define any particular slab for penalties under late or non-payment. The income tax department has the freedom of penalties i.e. amount of penalties and the assesse bound to pay penalty or not solely depends on the IT department. The IT department levies penalties after due scrutiny of the IT returns filed by the assesse. Last financial year, taxpayers had defaulted on self-assessment taxes amounting to Rs.3,859 crore, according to a statement given by the income-tax department. Attached is a ruling given by ITAT Mumbai bench regarding penalties on self-assessment tax. Please click here to view the full ruling. Assessee’s liability to penalty for not paying self-assessment tax does not cease merely by reason that before levy of such penalty, he has paid tax. Feel free to write to us,at [info@taxmantra.com] or call us at +91 88208208 11.