If you are a self-employed professional, a businessman or the owner of a company, you need to compute your income correctly while paying advance tax as well as tax deducted at source (TDS).
People filing Income Tax returns at Pragati Maidan in New Delhi.
Incorrect self-assessment may lead your tax returns to be termed defective straight
Under current provisions, in case an assessing officer suspects a tax self-assessment as defective, she can give the assessee an opportunity to rectify the error within 15 days. Only if the assessee fails to do this is the return termed defective.
Considering that a large number of assessees compute their tax payable as lower than it actually is, the Finance Bill has proposed an amendment in sub-section (9) of section 139 of the I-T Act, effective June 1 this year.
“It has been noticed that a large number of assessees are filing returns without payment of self-assessment tax, so it has been proposed to have an amendment, so that the returns can be regarded as defective unless the tax along with interest, if any, payable in accordance with the provisions of section 140A has been paid on or before the date of the furnishing of the return,” a department source said.
“This is a rationalising measure as per the memorandum explaining the Budget provisions,” said partner, Tax, KPMG, Parizad Sirwalla.
“This is a smart move by the finance minister, which will increase both the tax revenue and compliance on taxpayers’ part,” commented Delhi-based chartered accountant Abhishek Aneja.
“The downside is that the tax department may use it to harass, if there is any difference between the tax and interest determined by the tax department differs with the tax paid by the tax payer,” he said.
What is self assessment tax
While filing income tax returns, an assessee does a computation of income and taxes to be filed in the returns.
Sometimes, the tax paid either as advance tax or by way of TDS falls short of the actual tax payable (due to incorrect calculation).
The shortfall so determined is called the self assessment tax. This needs to be paid before Income Tax Returns are filed. (HTC)