Section 140A of ITA, 1961 : Section 140A: Self-Assessment

Explanation using Example

Imagine that Mr. Sharma, a salaried employee, has income from various sources including salary, rental income, and capital gains. For the financial year 2020-21, he calculates that he owes a total of ₹2,00,000 in taxes. Throughout the year, tax has been deducted at source (TDS) from his salary amounting to ₹1,50,000. He has also paid ₹20,000 in advance tax. Moreover, he has a tax credit of ₹10,000 for taxes paid in a foreign country, which is eligible for relief under section 90.

Before filing his income tax return, Mr. Sharma uses Section 140A of the Income-tax Act, 1961 to calculate the balance tax payable. He considers the TDS (₹1,50,000), advance tax paid (₹20,000), and the foreign tax credit (₹10,000). The total tax credit available to him is ₹1,80,000 (₹1,50,000 + ₹20,000 + ₹10,000). The tax payable on his return is ₹2,00,000, so he still owes ₹20,000 (₹2,00,000 - ₹1,80,000).

Mr. Sharma must pay this balance of ₹20,000 along with any applicable interest and fee for late payment before he can submit his tax return. If he fails to do so, he would be considered an assessee in default under Section 140A(3), and may face additional penalties.