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Pay Taxes now to avoid Interest & File before the Due date

We all know that the last few months have not been the easiest owing to the pandemic. Taking into account the difficulties that taxpayers could face while filing their returns, the Government has decided to extend the due date for filing ITR for FY20-21 as below:

Compliance Due Date
Filing ITR where Tax Audit is Not Applicable  30th September 2021
Filing ITR where Tax Audit is Applicable 30th Novemeber 2021

However, if your net Tax liability is above INR 1 lakh, you still need to pay Self-Assessment tax before 31st July to avoid interest under section 234A.

What is Self Assessment Tax?

Self-Assessment tax refers to the outstanding tax dues that have to be paid by the taxpayer after considering TDS deducted and Advance Tax paid. In other words, it is determined after calculating total taxable income and subtracting deductions & taxes paid.

So does every individual have to pay Self Assessment Tax? Not exactly. Only taxpayers whose tax liability for a financial year exceeds taxes paid including TDS and Advance Tax have to pay this tax.

You can pay Self-Assessment tax by depositing it in a bank physically with Tax Challan. Or you can pay it online on the TIN NSDL website.

Taxpayers with Self Assessment Tax liability of more than INR 1lakh, have to pay their dues by 31st July 2021. A delay in paying the tax may attract interest under section 234A of the Income-tax Act.

Now, what about Advance Tax?

Any person whose Income Tax liability for the year is INR 10,000 or more is liable to pay Advance Tax. Now if you don’t pay your Advance Tax or pay less than 90% of the total tax liability, you will be liable to pay interest under section 234B. Under this section, you have to pay 1% interest per month (or part of the month) from April (beginning of the Assessment year) till the day you pay the tax.

Advance Tax has to be paid quarterly. The following table shows Advance Tax liability along with due dates

Due date of Instalment % of Tax dues to be paid
On or before 15th June 15% of Tax liability
On or before 15th September 45% of Tax liability
On or before 15th December 75% of Tax liability
On or before 15th March 100% of Tax liability

In case you missed paying Advance Tax during the financial year, interest may be applicable u/s 234C

What if I miss filing ITR?

Failing to file your ITR within the due date comes with its repercussions. As already mentioned the government has extended the due date for filing ITR till 30th September for cases where Tax audit is not applicable. For cases where Tax audit is applicable, the ITR filing due date has been extended till 30th November.
However, if you fail to file your ITR by 30th September, then you will be charged a late fee under section 234F.

Under this section, a maximum fee of INR 10,000 can be imposed. For FY 2020-21 if ITR is filed after 30th September 2021 but before 31st December 2021 then a late fee of INR 5000 would be levied.

For returns filed after 31st December, a penalty of INR 10,000 would be levied.

The Income Tax department however has given some relief to the small taxpayers. For taxpayers whose total income does not exceed INR 5 lakh, the maximum penalty levied will be INR 1,000. 

The IT Department launched the new e-filing portal and with that major overhaul, third parties involved in the ecosystem need to update their systems to enable e-filing.

But fret not Quicko is all but ready to roll out some exciting features in the coming month. Get ready to file returns like never before!

Stay tuned!

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Got Questions? Ask Away!

  1. @ATDES is correct, you need to pay 100% of your tax liability in form of Advance tax before the 15th March of the financial year. Missing out on which may lead to interest u/s 234C and 234B

    @vivek25, The last date of filing ITR when Tax Audit is not Applicable for AY 2021-22 is 30th September 2021. You can still pay self-assessment tax and declare it when filing your ITR

  2. @Nireka Thanks.

    My query relates to my senior citizen parents. I understand that they are not liable to pay advance tax.

    So now after extension of due date for filing ITR, do they have time till Sept 2021 to pay self assessment tax as well? Hope I’m right?

  3. @vivek25, in case the outstanding tax liability is above INR 10,000 you should pay self-assessment tax before 31st July to avoid interest, and you can file ITR before the applicable due date.

  4. @Nireka

    You have mentioned that self assessment tax is to be paid by July 31st if liablility exceeds 10,000. But as per the mint article quoted by @venkat1926 , the threshold u/s Section 234A is Rs 1 Lakh.

    The tax liabliltiy for FY21 is Rs 12000 for my parents and since assessee is senior citizen, advance tax is not applicable.

    Please clarify.

    I quote from the said article:

    Like last year, the government has provided relief under Section 234A to taxpayers whose self-assessment tax is up to ₹1 lakh. Interest will be levied in case the tax liability of the person is more than ₹1 lakh

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