Key Takeaways
Income tax is a direct tax that is levied on the income of individuals and businesses by the government.
Exemptions on total income tax are typically granted for specific reasons, such as supporting dependents, investing in retirement savings, or promoting economic activities in certain sectors.
Income tax calculators are powerful tools that can help individuals and businesses estimate their tax liability.
Before you start using the salary income tax calculator, you need to have all the relevant information about your income, deductions, and exemptions.
Income tax is an essential part of any country's economic structure. It is a form of tax that governments collect on the income of individuals and organizations. The tax collected is used to fund various public services like healthcare, education, infrastructure, and so on. Income tax is calculated based on the amount of income an individual or organization earns over a given period.
In this article, we will discuss the salary income tax calculator, how it works, and its benefits.
What is Income Tax Calculator?
An income tax calculator is an online tool that helps individuals and organizations calculate their income tax liability. It is an easy and convenient way tocalculate your income taxas it eliminates the need for manual calculations, which can be time-consuming and prone to errors. The income tax calculator takes into account various factors like income, deductions, and exemptions and calculates the total tax liability accordingly.
How to Use the Online Income Tax Calculator?
Paying income tax is a crucial part of being a responsible citizen. However, it can be a daunting task to calculate your income tax liability, especially if you have multiple sources of income or various deductions and exemptions. Fortunately, the internet has made it easier than ever to calculate your income tax liability using an online income tax calculator.
Read ahead to go through a step-by-step guide on how to use an online income tax calculator.
Gather all relevant information
Find a reliable income tax calculator
Choose the correct assessment year
Enter your income details
Enter other details
Calculate your tax liability
Save and print the results
How to Understand Income Tax Slabs?
Income tax is adirect taxthat is levied on the income of individuals and businesses by the government. The tax is calculated based on the income earned by an individual in a financial year. Understanding income tax slabs is crucial as it determines the tax liability of an individual. Most importantly, the basic exemption limit has increased to ₹3 lakh from ₹2.5 lakh. The number of income tax slabs has been reduced from 6 to five.
Let’s now understand some jargon related to income tax slabs.
Income Tax Slabs
Gross Total Income
Taxable Income
Tax Liability
Income Tax Slab
| Old Regime | |
|---|---|
| Income Tax Slab | Income Tax Rate |
| Up to ₹ 2,50,000 | Nil |
| ₹ 2,50,001 - ₹ 5,00,000 | 5% above ₹ 2,50,000 |
| ₹ 5,00,001 - ₹ 10,00,000 | ₹ 12,500 + 20% above ₹ 5,00,000 |
| Above ₹ 10,00,000 | ₹ 1,12,500 + 30% above ₹ 10,00,000 |
| New Regime | |
|---|---|
| Income Tax Slab | Income Tax Rate |
| Up to ₹ 2,50,000 | Nil |
| ₹ 2,50,001 - ₹ 5,00,000 | 5% above ₹ 2,50,000 |
| ₹ 5,00,001 - ₹ 7,50,000 | ₹ 12,500 + 10% above ₹ 5,00,000 |
| ₹ 7,50,001 - ₹ 10,00,000 | ₹ 37,500 + 15% above ₹ 7,50,000 |
| ₹ 10,00,001 - ₹ 12,50,000 | ₹ 75,000 + 20% above ₹ 10,00,000 |
| ₹ 12,50,001 - ₹ 15,00,000 | ₹ 1,25,500 + 25% above ₹ 12,50,000 |
| Above ₹ 15,00,000 | ₹ 1,87,500 + 30% above ₹ 15,00,000 |
Claims on Tax deductions
Section 87A:Income below ₹5 lakhs is eligible for a tax rebate of up to ₹12,500.
Section 80CCD (1B):For exemption of up to ₹2 lakhs for money deposited in the National Pension System (NPS).
Section 80C:It permits a maximum annual deduction from the taxpayer's gross income of ₹1.5 lakh. Both individuals and HUFs are eligible to take advantage of this discount. LLPs, corporations, and partnership firms are not eligible for this deduction.
Section 80D:Up to ₹25,000 tax exemption on Medical Insurance Premium bills. The limit rises to ₹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 8OTTA/80TTB:Interest income from savings accounts is eligible for tax waivers of up to ₹10,000. For senior citizens, all forms of interest income up to ₹50,000 are fully waivered from tax calculations under Section 8OTTB.
How to Calculate the Total Income Tax Liability?
Calculating your total income tax liability can be a daunting task, especially if you are not familiar with the tax laws in your country. However, understanding the basics of how income tax works can help make the process a little easier.
Take these steps to calculate your total income tax liability.
Determine your taxable income
The first step in calculating your income tax liability is to determine your taxable income. This is the amount of income that is subject to taxation. Your taxable income is calculated by subtracting all allowable deductions from your gross income. Allowable deductions may include expenses such as mortgage interest, charitable contributions, and certain business expenses.
Calculate your tax liability
Once you have determined your taxable income and tax bracket, you can calculate your tax liability. This is the amount of tax you owe based on your taxable income and tax bracket. The tax liability is calculated by multiplying your taxable income by the tax rate for your tax bracket.
Deduct any tax credits
Tax credits are deductions that are subtracted directly from your tax liability. They can reduce your tax liability or increase your tax refund. Some common tax credits include credits for childcare expenses, education expenses, and renewable energy investments. Deduct any tax credits you may be eligible for from your tax liability.
Calculate your total income tax liability
Your total income tax liability is the amount of tax you owe after deducting any tax credits from your tax liability. This is the final amount of tax you will owe for the tax year. If you have already paid some tax during the year through paycheck withholding or estimated tax payments, subtract that amount from your total tax liability to determine how much you still owe or how much refund you may expect.
Exemptions on Total Income Tax
Taxation is an integral part of any modern economy, providing governments with the necessary revenue to fund public services and infrastructure. However, tax laws often include exemptions and deductions that allow taxpayers to reduce their overall tax liability. One such concept is exemptions on total income tax, which refers to certain exclusions from the total income of a taxpayer, resulting in a lower taxable income and, consequently, a reduced tax liability. Exemptions on total income tax are typically granted for specific reasons, such as supporting dependents, investing in retirement savings, or promoting economic activities in certain sectors. Understanding the intricacies of exemptions on total income tax can help taxpayers optimize their tax planning strategies and potentially reduce their overall tax burden.
Section 80C
This is one of the most popular sections under the Income Tax Act, and it allows individuals to claim a deduction of up to ₹1.5 lakhs on their total income tax. This deduction is available for various investments and expenses, including contributions to a provident fund, life insurance premiums, tuition fees paid for children, and investments in certain specified instruments such asNational Savings Certificate (NSC),Public Provident Fund (PPF), Equity Linked Savings Scheme (ELSS), and so on.
Section 80D
This section allows individuals to claim a deduction of up to ₹25,000 on health insurance premiums paid for themselves, their spouses, and their dependent children. An additional deduction of ₹25,000 is available for health insurance premiums paid for parents, and if the parents are senior citizens, the deduction limit is increased to ₹50,000.
Section 80E
This section allows individuals to claim a deduction on the interest paid on education loans for themselves, their spouses, and their children. The deduction is available for a maximum of eight years or until the loan is fully repaid, whichever is earlier.
Section 80G
This section allows individuals to claim a deduction for donations made to specified charitable organizations. The deduction amount varies based on the type of organization and the amount of donation made.
Wrapping Up
Income tax calculators are powerful tools that can help individuals and businesses estimate their tax liability. They allow for the easy input of income and expenses and quickly calculate the amount of taxes owed or refunded. These calculators are widely available and can be used to plan for tax payments and budget accordingly. However, it is important to note that income tax calculators are not a substitute for professional tax advice.
Tax laws and regulations can be complex and subject to change, and a tax professional can provide valuable guidance and ensure that taxpayers are taking advantage of all available deductions and credits. Ultimately, income tax calculators are a useful resource, but taxpayers should seek the advice of a qualified professional to ensure they are compliant with tax laws and regulations.
Disclaimers
You may avail of tax benefits under Section 80C and Section 10(10D) of Income Tax Act, 1961 subject to conditions as specified in those sections. Tax benefits are subject to change as per tax laws. Customer is advised to take an independent view from tax consultant.
The calculation is generated on the basis of information provided and does not constitute an offer or solicitation for the purpose of purchase or sale of any product. Further customer is the advised to go through the sales brochure before conducting any sale. Ref No : KLI/23-24/E-WEB/467
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