Self Assessment Tax : How to Pay Online & Calculation

Introduction

You have gathered your Form 16, downloaded your interest certificates, and sat down to file your Income Tax Return. You expect the process to be smooth, perhaps even hoping for a small refund. But as you enter the numbers into the tax utility, you are greeted with a nasty surprise: a figure in red labeled "Tax Payable."

This is a common scenario for many taxpayers, especially those who have switched jobs, earned interest from savings accounts, or made capital gains during the year. The balance amount that you owe to the government after deducting all TDS and Advance Tax is called Self Assessment Tax (SAT).

Unlike TDS, which is cut by others, SAT is a voluntary payment you must make before you can successfully file your return. If you submit your return without paying this due, the Income Tax Department will treat your return as "Defective." In this guide, we will walk you through the simple math of calculating SAT and the updated step-by-step process to pay it on the new Income Tax Portal.

Table of Contents

1. What is Self Assessment Tax (SAT)?
2. Self Assessment Tax vs. Advance Tax
3. Why Do You Have a Tax Due? (Common Reasons)
4. How to Calculate Self Assessment Tax
5. Interest Penalties (Section 234A, 234B, 234C)
6. Step-by-Step Guide to Pay SAT Online (2025 Updated)
7. What is Challan 280? (The Old vs New System)
8. How to Verify Your Payment
9. Can You File ITR Without Paying SAT?
10. FAQs

What is Self Assessment Tax (SAT)?

Self-Assessment Tax is the tax paid by a taxpayer at the time of filing the Annual Income Tax Return. It represents the shortfall in your tax liability.

The name "Self Assessment" comes from the fact that you (the taxpayer) are assessing your own income, calculating the tax due, and paying the difference voluntarily. It typically arises when the tax deducted at source (TDS) and advance tax paid during the year are insufficient to cover your total tax liability.

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Self Assessment Tax vs. Advance Tax

Many people confuse these two terms because both involve paying tax directly to the government.

• Advance Tax: This is tax paid during the financial year (April to March) in installments (June, Sept, Dec, March). It is based on estimated income.
• Self Assessment Tax: This is a tax paid after the financial year ends (usually between April and July), just before filing the return. It is based on actual final income.

Think of it this way: Advance Tax is a "Pay as you Earn" scheme. Self Assessment Tax is the "Final Settlement."

Why Do You Have a Tax Due? (Common Reasons)

Even if you are a salaried employee and your company deducts TDS, you might still end up with SAT. Here is why:

1. Interest Income: Banks deduct only 10% TDS on FD interest, but if you fall in the 30% slab, you owe the remaining 20% as SAT.
2. Job Change: If you worked at two companies, both might have given you the benefit of the standard deduction and 80C limit. When you combine the incomes, your tax liability shoots up.
3. Capital Gains: Profit from selling stocks or mutual funds is often not subject to TDS for residents, so you must pay the tax yourself.
4. Savings Account Interest: Interest up to ₹10,000 (Section 80TTA) is exempt, but anything above that is fully taxable and often attracts SAT.

How to Calculate Self Assessment Tax

The formula is straightforward.

Formula:

SAT = (Total Tax Liability) - (TDS Deducted) - (TCS Collected) - (Advance Tax Paid) - (MAT Credit, if any).

Example:

• Total Tax on Income: ₹1,50,000
• Less: TDS by Employer: ₹1,00,000
• Less: TDS by Bank: ₹10,000
• Less: Advance Tax Paid: ₹20,000
• Balance Payable: ₹20,000

This ₹20,000 (plus any applicable interest) must be paid as Self Assessment Tax.

Interest Penalties (Section 234A, 234B, 234C)

If you are paying tax at the time of filing ITR, you are technically late.

• Section 234B: Applies if you paid less than 90% of your total tax as Advance Tax. Interest is 1% per month starting from April 1st of the assessment year.
• Section 234C: Applies if you missed specific advance tax installment deadlines.
• Section 234A: Applies only if you are filing your return after the due date (usually July 31st).

So, when you pay SAT, the portal will often ask you to calculate interest and add it to the principal tax amount.

Step-by-Step Guide to Pay SAT Online (2025 Updated)

The process has changed significantly with the new "e-Pay Tax" facility on the portal. You no longer need to visit the NSDL website.

Step 1: Log in

Go to the Income Tax E-filing portal and log in.

Step 2: Navigate to e-Pay Tax

Click on e-File > e-Pay Tax. You will see your payment history here. Click on the "New Payment" button.

Step 3: Select Tax Type

You will see a tile for "Income Tax (Advance Tax, Self-Assessment Tax)". Click "Proceed".

Step 4: Select Assessment Year

Be careful here. If you are filing for the financial year 2024-25, select Assessment Year 2025-26.

Under "Type of Payment," select "Self-Assessment Tax (300)".

Step 5: Enter Amount

Enter the tax breakdown (Tax, Surcharge, Cess, Interest). The total will auto-calculate. Click "Continue".

Step 6: Payment Gateway

Select your preferred mode: Net Banking, Debit Card, UPI, or Payment Gateway (for Credit Cards).

• Note: You can now pay using UPI (GPay/PhonePe) directly on the tax portal.

Step 7: Download Challan

Once the payment is successful, download the Challan Receipt. You will need the BSR Code and Challan Serial Number to fill in your ITR form.

What is Challan 280? (The Old vs New System)

"Challan 280" was the physical or online form used in the old NSDL system to pay income tax.

On the new portal, the term "Challan 280" is technically obsolete for online payments as the system is integrated. However, the concept remains the same. When you select "Self Assessment Tax (300)," you are essentially filling the modern equivalent of Challan 280.

How to Verify Your Payment

After paying, wait for 2-3 days for the amount to reflect in your Annual Information Statement (AIS) under the "Taxes Paid" section.

In your ITR form, go to the "Taxes Paid" schedule. The system often pre-fills the challan details. If not, you can manually add the BSR code and Challan number from your receipt.

Can You File ITR Without Paying SAT?

Technically, the portal might allow you to upload the JSON or submit the form even with a "Tax Payable" figure.

However, this is dangerous.

If you file ITR without paying the full tax:

1. The return may be treated as Defective.
2. The department will send a demand notice with additional interest.
3. You lose the chance to carry forward losses (like stock market losses) if the return is invalidated.