Income tax calculator is a tool available online that aids in calculating the amount of income tax payable by an individual in a particular financial year. The tax calculator provides an approximate figure of your income tax liability by taking into account various data such as your income, tax deductions, HRA exemption, etc.
You can pay income tax either as tax deduction at source during the payment of your monthly salary or via the Income Tax returns portal operated by the Central Board of Direct Taxes (CBDT).
What is Income Tax Calculator
An Income-tax calculator is an online tool that helps to evaluate taxes based on a person’s income, his respective tax slab and tax liability. Individuals falling under the taxable income bracket are liable to pay a specific portion of their net annual income as tax. Income tax can be paid either as tax deducted at source while disbursement of monthly salary, or through the income tax returns portal managed by the Central Board of Direct Taxes (CBDT). The provision for online payment of taxes is to ensure individuals pay their stipulated dues on any earnings generated from other sources.
How to Use the Online Income Tax Calculator?
Follow the below-given steps to use the Indian Income Tax Calculator:
- Choose the assessment year for which you want to calculate the tax. If you are looking for FY 2023-24, then the AY would be 2024-25, which you can select from the dropdown menu.
- In the next field, select your age. As already mentioned, Income tax in India differs based on different age groups.
- Next, click on the ‘income field’. Provide the details of your gross salary (monthly or yearly salary paid without any deductions). Also, you have to fill in other details like annual income from other sources such as rental income, annual interest paid on home loans for the self-occupied and let-out property.
- Next, enter the details of various deductions, viz. basic deductions u/s under Section 87A, 80C, 80CCD (1B), 80D, 80G, 80E, 80TTA, 80TTB, 80GG. Also, provide the details of interest on an educational loan and on deposits on the savings account.
- In the next step, provide the details of HRA exemption such as basic salary, DA, HRA, and total rent paid per annum.
- Finally, select whether you live in a metro city and hit the calculate button to obtain your tax liability.
How to Understand Income Tax Slabs?
The Indian Income-tax works on the basis of a slab system and the tax is levied accordingly on individual taxpayers. Slab implies the different tax rates charged for different income ranges. In other words, the more your income, the more tax you have to pay. These slabs of income tax are revised every year during the budget announcement. Again, These slab rates are segregated for different categories of taxpayers. As per the Income-tax of India, there are three categories of “individual “taxpayers such as:
- Individuals below 60 years of age, including residents and non-residents
- Resident Senior citizens – 60 to 80 years of age
- Resident Super senior citizens – more than 80 years of age
Exemptions on Total Income Tax
Here’s how to calculate income tax based on exemptions-
- Section 87A – Income below Rs. 5 lakh is eligible for a tax rebate of up to Rs. 12,500.
- Section 80C – Rebate of up to Rs. 1.5 Lakh in any tax-saver fixed deposits, public provident funds, national savings certificate, unit-linked insurance plans, and equity-linked savings schemes on the interest income.
- Section 80CCD (1B) – Tax exemption of up to Rs. 2 lakh for money deposited in the national pension system.
- Section 80D – Up to Rs. 25,000 tax exemption on medical insurance premium bills. The limit rises to Rs. 50,000 for senior citizens.
- Section 80G – Any donations made to charitable organizations are fully exempt from tax calculations.
- Section 80E – Interest on education loan enjoys a 100% tax rebate for up to 8 years.
- Section 80TTA/80TTB – Interest income from savings accounts is eligible for tax waivers up to Rs. 10,000. For senior citizens, all forms of interest income up to Rs. 50,000 are fully waivered from tax calculations, under Section 80TTB.
- Section 80GG – Tax exemption on income spent towards paying house rent (house rent allowance.)
How to Calculate the Total Income Tax Liability?
How is income tax calculated is often a commonly asked question. Individuals can determine the total tax expenses through an online income tax calculator. Such tools take into account the following pointers to reflect the actual tax liability of a resident or non-resident Indian at the end of a financial year –
- Annual income from salary/profits.
- Income from other sources such as investments, rental income, etc.
- Tax exemptions applicable, if any.
- House rent and transport allowance.
Entering accurate data regarding the above-mentioned pointers will demonstrate the total tax liability of individuals. Minus the taxes already paid through TDS, the remaining can be deposited directly online through the official portal Challan 280. If, in any event, the taxes paid exceed the total liability, the difference is reimbursed by the government within 30 days of filing for the same.
Taxpayers who file their return after the due date will have to pay interest under 234A and penalty under section 234F. Hence, remembering the due date of filing income tax returns is indispensable. However, keep in mind that the due date varies according to the category of taxpayers. For instance, if you are a salaried individual, usually you must file your income tax returns by the 31st of July of the assessment year.
FAQs
What do you mean by Income Tax?
Income tax is a tax levied on an individual’s or business’s annual income. It is calculated, assessed, and collected on the basis of the individual’s/business’s income for a particular financial year. Income tax in India is implemented through the income tax Act, 1961.
How is my tax calculated on salary?
It involves several steps, such as calculating your gross salary, figuring out deductions and exemptions, figuring out how much tax you owe, deducting tax you have already paid, etc.