Pay your tax before filing returns
In the midst of the tax season, the first thing that a person needs to ensure is that he has paid the due amount of tax. Payment of lesser amount would lead to payment of interest, reports Arnav Pandya.Updated: Jul 15, 2008 21:25 IST
In the midst of the tax season, the first thing that a person needs to ensure is that he has paid the due amount of tax. Payment of lesser amount would lead to payment of interest in addition to some other charges.
This causes lot of worry for an individual who has to know the manner in which this process can be completed. There are three ways in which this can be done and the proportion for each of them will be different but this can be used as per requirement.
Tax Deducted at source
One mode of tax payment in which the individual has to do very little is TDS (tax deducted at source). This is the amount that the payer deducts before making payment to a person.
There is nothing that the person has to do in this situation except give the permanent account number (PAN) so this can be mentioned on the TDS certificate. There are specified rates of deduction for various kinds of payment and this is judiciously followed.
There are times when the TDS rate is lower than the rate of tax that a person has to pay. In such situations the person will have to make additional payment depending on the final tax amount that will be due. This has to be done during the same year, by estimating the amount that they will earn. Usually, this is for people with business or professional income.
Even salaried people who have more than Rs 5,000 of tax to be paid will be required to pay advance tax. The idea is that the extra payment would have to be covered fully before the end of the financial year itself.
Self Assessment Tax
There are times when an individual might need to pay more tax than what is deducted by way of TDS and Advanced Tax. This happens when there is sudden increase in income or has not taken into account some source of income or profit.
In such a situation, a person can pay the difference in tax amount before filing the return. This is known as self-assessment tax and the details of this payment have to be mentioned in the tax return.