Difference between self assessment tax and advance tax

Both self assessment and advance tax are paid to government of India based on the IT act provisions as applicable to the assessee. Even though both relates to tax liability that is paid to the government, there is a difference and provisions are mentioned under different sections of IT act.

Today, in this article we will be discussing the difference between self assessment and advance tax.

difference between self assessment and advance tax

What is advance tax?

As the name suggests, advance tax refers to paying a portion of yearly tax liability in advance. If liability for the year exceeds Rs. 10000 then the assessee has to pay advance tax on or before the due dates as specified.

It’s also known as ‘pay as you earn’ scheme, where assessee pay in the year in which the income is received or earned. If you do not pay it based on the percentage as specified in installments, then you will be charged 1% every month for the amount outstanding for the period.

A salaried person is generally not liable to pay advance tax as employer use to deduct TDS based on the salary income of employee. However, employees will be liable to advance tax if they have any other income and by taking such income in addition to salary, their liability at the end of the year is estimated to exceed Rs. 10000.

What is self assessment tax?

Before filling yearly IT return, assessees are required to calculate their final liability after taking out TDS that is deducted from source of income and advance tax paid during the year.

At the end of the year, if any tax is required to be paid then that has to be paid before filling IT return. Final liability as calculated by you is called self assessment tax. This calculation is the final. After which IT authority is required to check that the assessee has correctly calculated and disclosed his income.

Editorial Staff at Yourfinancebook is a team of finance professionals. The team has more than a decade experience in taxation and personal finance.

Reader Comments

  1. rohit

    If I pay advance tax , of course in advance, will i get that refunded at the end of year (If final tax paid balance comes more than needed)

    1. YFB

      If tax paid in advance is less than the actual liability at the end of the year then you have to file income tax return as applicable to you to claim refund. If your claim is right then tax department have to refund back the excess amount paid.

  2. Sujatha Soman

    we have to start a sole proprietor business dealling with human hair at the end of february 2016. please give guide lines of taxe rate and how to file it return.

  3. Satish kumar

    I am a public sector bank employee and retired in July 2016 . The bank deducted tds while paying arrears of salary on wage revision. While calculating my tax liability in the month of march now i came to know that i am required to pay more tax.
    Since i am retired now, a) should i tell and insist my employee to deduct the balance amount of tax from my sb account under the sanction tds on salary paid.
    b) would it be appropriate if my self directly deposit the income tax on line, if so, it should be deposited under which head (i)self assessment or (ii) advance tax c) which challan is to be use.7

    1. Ramakrishnan

      I’m also under the same category. I guess we need to pay advanced tax since we are paying before the financial year ending. Say if we are paying after March 31, 2017 then we need to pay self assessment tax.

      The challan would be 280.

      Am I correct?


  4. sudhakar

    By mistake i made epayment on 17 mar2016 under advance tax head rather than self assessment tax.pl tell how to correct it.

  5. Ghanshyam singh

    I am a salaried person, my tax is regularly deducted by my employer as tds, in my form 26 as my fd interest is added to my income, so i have to pay the 170 rs. Tax including cess n surcharge.
    How to pay?
    To pay as a self assesment tax?

    1. YFB

      Yes, you need to pay it as self assessment tax and include it in your income tax return form.

  6. Dipankar Nandy

    I am a retired central government employee. I have income from pension & bank interests only. Do I need to pay advance tax or self assessment tax? When such tax is to be paid?

  7. Parvez Pundir

    Mr Dipankar you have to pay tax only if your annual income is taxable. Bank deduct tds on the interest paid to you. If your income is taxable you can pay remaining tax under header advance tax /reassessment tax and file return. In case you are income is not taxable you can claim for refund for tds by filing income tax return

  8. w a khan

    i m a govt employee. my fd will mature in march. tds will be deducted at a lesser rate.should i pay advance tax or self assessment tax?

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