Form 16 has been postponed to July 15, although the deadline for self-assessment tax over Rs 1 lakh is still July 31.
The government has delayed numerous income tax deadlines as a result of the second wave of the coronavirus, including those for filing income tax returns for FY 2020-21, issuing Form 16, and others. However, for those whose tax liability after deduction of TDS and advance tax exceeds Rs 1 lakh, the deadline for filing self-assessment tax for FY20-21 has not been extended. If a self-assessment tax of more than Rs 1 lakh is not paid by July 31, such individuals may face a penalty.
RSM India’s Founder, Dr Suresh Surana, adds, “Additionally, an extension has been granted to employees for the issuance of TDS certificates in Form 16 following the extension of the due date for filing TDS returns. The issuance of TDS certificates in non-salary instances does not currently have a corresponding extension. As a result, by June 15, 2021, banks must submit Form 16A (TDS certificate for tax deducted on interest).”
According to a government press release issued on May 20, 2021, if an individual taxpayer’s tax dues for FY 2020-21 exceed Rs 1 lakh after deducting TDS and advance tax dues, the payment must be made on or before July 31, 2021. From August 1, 2021, until the date of filing of the ITR, criminal interest will be charged at a rate of 1% per month under section 234A of the Income-tax Act, 1961.
This is comparable to the government’s action last year, which only benefited small and medium-sized taxpayers.
Even though the ITR filing date for people whose accounts are not required to be audited has been extended to September 30, 2021, if an individual’s tax liability for FY 2020-21 exceeds Rs1 lakh, they must pay the amount before July 31, 2021 to avoid paying penal interest.
“It has been clarified that interest under section 234A of the Act shall continue to be levied where the tax payable (after TDS/TCS, advance tax, relief under section 89, 90/ 90A/ 91, MAT credit) is more than Rs. 1 lakh,” says New Delhi-based practising chartered accountant Sachin Vasudeva.
Deloitte India Partner Saraswathi Kasturirangan believes “The extension of the deadline for filing tax returns is a good thing. However, when the self-assessment tax owed on the return is more than Rs 1 lakh, this does not afford relief from the interest that is charged for filing the return after the initial due date.”
How to calculate self-assessment tax?
To figure out how much self-assessment tax you owe for FY 2020-21, follow these steps:
Step 1: Determine your entire income for the fiscal year 2020-21. This comprises wages, capital gains, rental income, interest income, dividend income, and other sources of income.
Step 2: To calculate your net taxable income, subtract your total income from your tax exemptions and deductions. House rent allowance, tax-saving investments under section 80C (ELSS, PPF, etc.), premium paid on your health insurance policy, and so on are examples of tax exemptions and deductions.
Step 3: Determine the amount of tax you owe on your net taxable income. You may determine your income tax liability using ET Wealth’s online calculator.
Step 4: Subtract the amount of taxes paid as TDS from your salary, interest income, and other sources from your total tax liability. Deduct the advance tax (if any) that you paid in the fiscal year 2020-21. These facts will be reflected on your Form 26AS. The deadline for filing TDS/TCS returns has been extended by the government to July 31.
When you reduce the TDS and advance tax from your overall tax liability, you’ll get the amount of self-assessment tax you’ll have to pay before filing your ITR.