Section 140A mandates taxpayers to self-assess their income, calculate tax liability, and pay any outstanding tax before filing their return. This ensures compliance and avoids penalties for underpayment. Below is a detailed breakdown of its provisions, calculation, and procedures.
1. Key Provisions of Section 140A
(A) Who Must Pay Self-Assessment Tax?
- All taxpayersfiling returns under:
- Section 139(Regular, belated, or revised returns)
- Section 142(1)(Notice for filing return)
- Section 148(Income escaping assessment)
- Section 153A(Search cases).
(B) Components of Self-Assessment Tax
- Tax on Total Income(After deductions like 80C, 80D).
- Interest(Under Sections 234A/B/C for late filing/advance tax defaults).
- Fee(Under Section 234F for delayed filing).
(C) Payment Deadline
- Must be paid before filing the ITR.
- Late payment attracts interest @1% per monthunder Section 234A.
2. Calculation of Self-Assessment Tax
Step-by-Step Formula
| COMPONENT | ACTION |
| Total Taxable Income | Compute income from all sources (salary, business, capital gains, etc.). |
| Add: Surcharge & Cess | Apply applicable rates (e.g., 4% health and education cess). |
| Deduct: TDS/TCS | Subtract tax already deducted/collected. |
| Deduct: Advance Tax | Subtract advance tax paid during the year. |
| Add: Interest (234A/B/C) | Include interest for late filing/advance tax shortfall. |
| Final Tax Payable | Pay the balance as self-assessment tax. |
Example:
- Total Tax Liability: ₹2,00,000
- TDS: ₹1,50,000 | Advance Tax: ₹20,000
- Interest (234A): ₹10,000
- Self-Assessment Tax: ₹2,00,000 – ₹1,50,000 – ₹20,000 + ₹10,000 = ₹40,000.
3. How to Pay Self-Assessment Tax?
(A) Online Payment
- Visit gov.in→ “e-Pay Tax”.
- Select Challan 280→ “Self-Assessment Tax”.
- Enter PAN, assessment year (e.g., AY 2025-26), and amount.
- Pay via Net Banking/Debit Card/UPI.
- Download Challan 280for ITR filing.
(B) Offline Payment
- Submit Challan 280at authorized bank branches (rarely used now).
4. Consequences of Non-Compliance
- Interest Penalty: 1% per month under Section 234A.
- Defective Return: Return may be rejected if tax is unpaid.
- Best Judgment Assessment: AO may estimate higher income under Section 144.
1. Consequences of Failure to Pay Self-Assessment Tax (Whole or Part)
Under Section 140A(3) of the Income Tax Act, 1961, failing to pay the full or partial self-assessment tax, interest, or fees before filing the return triggers severe penalties and legal actions. Here’s a detailed breakdown of the consequences:
1. Penalty for Default (Section 140A(3) + Section 221(1))
- Assessee in Default: The taxpayer is deemed a “defaulter” for the unpaid amount.
- Penalty Amount:
- The Assessing Officer (AO) may impose a penalty up to the unpaid tax amount.
- Example: If ₹50,000 tax is unpaid, the penalty can be up to ₹50,000 (at the AO’s discretion).
2. Interest Charges
- Section 234A: 1% per monthon unpaid tax from the return due date (e.g., July 31 for individuals).
- Section 234B: 1% monthlyinterest if 90% of advance tax wasn’t paid by March 31.
- Section 234C: Interest for deferred advance tax instalments.
3. Prosecution (Section 276C)
- Willful Evasion: Non-payment with intent to evade tax may lead to:
- Imprisonment: 3 months to 2 years (if tax evaded ≤ ₹25 lakh) or 6 months to 7 years (if > ₹25 lakh).
- Fine: Determined by the court.
4. Adjustments Against Refunds
- Any pending refunds (e.g., TDS excess) will be adjusted against unpaid tax.
5. Best Judgment Assessment (Section 144)
- The AO may estimate income and demand tax without taxpayer consentif returns are invalid due to non-payment
