CMA Intermediate · Direct and Indirect Taxation

Self-Assessment and Intimation: formula sheet

Full chapter guide

Key formulas

Self-assessment tax payable: Tax on declared total income − advance tax − TDS/TCS − section 266(2) reliefs and credits, plus interest and fee payable; Pay this before furnishing the return. Interest and fee are added to the payment, not deducted.
Order of adjustment on short payment: Fee first → interest next → tax last; Section 266(3). The balance, if any, goes to tax.
Base for interest under section 423: Tax on declared total income − advance tax − TDS/TCS − reliefs and credits in section 266(4); Section 266(4) prescribes the base on which interest under section 423 is computed.
Base for interest under section 424: Assessed tax, or the amount by which advance tax paid falls short of assessed tax; Assessed tax is tax on declared total income less TDS/TCS on income included in total income, and the reliefs and credits in section 266(6).
Credit of payment on assessment: Amount paid under section 266(1) is deemed paid towards the regular assessment; Section 266(7), after an assessment under section 270 or 271 or section 294.
Consequence of non-payment: Unpaid tax, interest or fee makes you an assessee in default; Section 266(8), without prejudice to other consequences under section 266(9).
Adjusted total income: Total income or loss as filed ± adjustments under section 270(1)(a); Only the listed adjustments are allowed: arithmetical error, apparent incorrect claim, prescribed inconsistency, loss disallowance, audit-report items, late-return Chapter VIII-C deduction.
Sum payable or refund due: (Tax + interest + fee on adjusted income) − (TDS + TCS + advance tax + Chapter IX rebate or relief + self-assessment tax + other amounts paid); Positive result is payable; negative result is refund. Section 270(1)(c).
Prior communication: Communication of proposed adjustment first; if no response within 30 days, adjust and send intimation; Section 270(2). Any response received must be considered.
Time limit for intimation: Not after 9 months from the end of the financial year in which the return is made; Section 270(4). Count from the end of the financial year of filing, not the date of filing.
Deemed intimation: Acknowledgement of return = intimation, if nothing payable or refundable and no adjustment made; Section 270(5)(b).
TDS/TCS statement processing time limit: Intimation within 1 year from the end of the tax year in which the statement is filed; Section 399(2). This is a different limit, for deductors and collectors.
Scrutiny notice time limit: Notice under section 270(8) not after 3 months from the end of the financial year in which the return is furnished; Section 270(9). Do not mix with the 9-month intimation limit.
Permitted adjustments (main ones to remember): Arithmetical error | Incorrect claim apparent from return | Loss disallowed if return late | Audit-report items not reflected | Specified deductions disallowed if return late | Income per Form 26AS/TDS data not included; Only adjustments listed in the Act are allowed at processing. The Act has further clauses, such as specified fund contributions and tax credit mismatch. Anything outside the statutory list needs scrutiny.
Safeguard before adjustment: Adjustment prejudicial to assessee (increases income or reduces loss) → intimation of proposed adjustment → consider reply → if no reply within 30 days of issue, proceed; A prejudicial adjustment without prior intimation is not valid. No intimation is needed where the adjustment does not adversely affect the assessee.
Net result of processing: Tax on adjusted total income (with cess, interest, fee) − (advance tax + TDS + TCS + self-assessment tax + relief) = demand if positive, refund if negative; Apply the credits to the adjusted figures, not the figures in your return.
Effect of the intimation: Tax payable: intimation = notice of demand | Refund due: refund granted to you; A refund may be set off against an outstanding demand, after you are informed.
Self-assessment: Tax payable on own computation – tax already paid (advance tax, TDS, TCS) = tax to be paid before filing; The assessee does this. No officer is involved.
Summary assessment (intimation): Return → processing and adjustments → intimation of tax payable or refund; Done without scrutiny. The assessee is not heard on the processing itself.
Scrutiny assessment: Selection → notice → inquiry and hearing → assessment order; The Assessing Officer examines claims in detail and can make additions to income.
Best judgment assessment: Non-filing or non-compliance → assessment on the officer's best judgment; A fallback for default. It is not a normal route.
Summary vs scrutiny test: Is there a notice and an inquiry? Yes = scrutiny. No = summary.; Use this to classify any fact pattern quickly.

Quick revision

Self-assessment tax is the tax, interest and fee payable on the return after crediting TDS, TCS, advance tax and relief.
Interest for default in furnishing the return, and for default or deferment in payment of advance tax, and the fee for late filing, are added to the tax before prepaid taxes are deducted.
Pay self-assessment tax before you file the return.
Processing is a quick, limited check of the return, not a detailed assessment.
The result of processing is communicated by an intimation.
Only the adjustments listed in the Act are allowed on processing.
Check the Act for what the officer must do before making an adjustment and for the time limit on intimation.
If prepaid taxes exceed the tax due, the excess is refunded.
Interest on refunds and on defaults follows the rates and conditions in the Act, so learn them as stated.
Scrutiny assessment under the Income-tax Act, 2025 is a detailed examination, unlike processing.
Use the terms tax year and Income-tax Act, 2025 in every answer.
In a numerical, show each step: tax, add-ons, credits, balance payable or refundable.

Common mistakes

Paying self-assessment tax after filing the return Fix: Remember section 266(1)(a): pay before furnishing the return, and attach proof of payment.
Adjusting a part payment first to tax Fix: Section 266(3) reverses it: fee, then interest, then tax. Write the order in the answer.
Counting the 9 months from the date of filing the return. Fix: Section 270(4) counts from the end of the financial year in which the return is made. Go to 31 March first, then add 9 months.
Treating every disallowance as a valid processing adjustment. Fix: Only the heads in section 270(1)(a) are allowed. A debatable disallowance needs scrutiny.
Treating any wrong claim as adjustable at processing. Fix: Allow adjustment only when the error is visible from the return's own information. Doubtful or evidence-based claims go to scrutiny.
Forgetting the prior intimation and the chance to reply for a prejudicial adjustment. Fix: Write one line: for an adjustment that increases income or reduces loss, intimation of proposed adjustment, reply considered, and 30 days to respond.
Treating the intimation as a completed scrutiny assessment. Fix: Remember that an intimation comes from processing without inquiry. Scrutiny needs a notice, a hearing and a reasoned order.
Saying that once an intimation is received, scrutiny can never follow. Fix: Write that the Assessing Officer can still select the return for scrutiny, subject to the conditions and time limits in the Act.

Exam tips

Quote section 266 by number in theory answers and give the three points: pay before filing, attach proof, and the fee-interest-tax order.
In numericals, show the credits as a list so you earn a mark for each one.
Write one closing line on section 266(7) and (8) in answers that mention assessment or default.
Use the terms tax year and Income-tax Act, 2025. Avoid assessment year.
In MCQs, check the order of adjustment carefully. Tax is last, not first.
In theory answers, quote the sub-section: adjustments in 270(1)(a), prior communication in 270(2), time limit in 270(4), meaning of incorrect claim in 270(5).
In MCQs, watch the numbers: 30 days, 9 months, 3 months and 1 year each belong to a different rule.
For numerical questions, show a small table of tax, credits and net payable or refund. Step marks sit in the credits list.