Difference between Advance Tax & Self-Assessment Tax

Taxes can be confusing if you don’t understand them. Therefore, it is always better to have the clarity to avoid any penalties. This blog will help you understand the difference between the two important taxes- Advance Tax and Self-Assessment Tax.

Advance Tax:

• It is the tax that is paid by a person during the current financial year after taking into account the total income earned/expected to be earned during the year. This tax is paid in the year in which the income is earned/received.
• It is payable if the total tax liability in a given year is Rs. 10,000 or more, excluding salary income. Salary income is excluded as in the case of salary, tax (TDS) is deducted by the employer and deposited with the government directly. While calculating Advance Tax, one has to add all taxable income like interest income, capital gains, etc., and pay tax on it.
• The tax has to be paid on or before the due dates defined by Income Tax authorities. Nonpayment of Advance Tax on the due date attracts a penalty. For a detailed understanding of Advance Tax and the applicable due dates, visit  All about Advance Tax.

Self-Assessment Tax:

• It is a tax that is assessed by the taxpayer herself/himself before filing the Income-Tax return and deposited with the government. It is paid on the income earned during the last financial year.
• At the time of filing an Income tax return, if there is a shortfall in the total tax paid, after taking into account the Tax Deducted at Source (TDS) and Advance Tax paid, then one has to pay Self-Assessment Tax.
• Self Assessment Tax payable = Total Tax payable- Tax Deducted at Source- Advance Tax paid.

Both the Advance tax and Self-Assessment tax can be paid using the tax payment Challan No “ITNS 280”. These taxes can be paid online through the I-T department, National Securities Depository (NSDL) website, or through Net Banking. For people who intend to pay tax offline, the Reserve Bank of India (RBI)has designated bank branches in India, that can accept tax payment. You can locate the bank branch by visiting the link: https://www.incometaxindia.gov.in/Pages/tax-services/locate-bank-branch.aspx.