One of the most hated annual jobs of most working people is filing income taxes. And with the Ministry of Finance bringing out new additions and exemptions in the Union Budget in each financial year, the already hectic task is making it even more difficult for people to calculate the taxable income from salary and figuring out the take-home salary.
An online tax calculator or an income tax calculator, however, simplifies the cumbersome process of evaluating your tax liability by determining what slab of tax rate you fall under and how you can invest for effective tax savings.
To put it in one line, income tax is the tax that is levied on your income. If you fall under the income tax slab laid down by the government, you must pay a specific part of your net annual income as tax. You can pay your income tax as tax deducted as sourced (TDS) during the payment of your monthly salary or through the Central Board of Direct Taxes (CBDT) income tax returns portal.
Considering the deductions and exemptions, calculating your income tax can be quite a task. An income tax calculator is a convenient and free online instrument that will help you evaluate taxes payable on your income on the basis of the guidelines laid by the Union Budget in one financial year.
To calculate income tax, the IT calculator needs to be provided with basic information, such as annual salary, fees, active loans, and other savings to determine your tax liability.
There are various advantages of the income tax calculator. Here’s a list of the perks of using an online income tax calculator.
A new tax regime has been introduced by the Ministry of Finance’s Union Budget 2020 alongside the older one. Taxpayers are free to choose the regime that they’ll follow. The tax calculator can help you decide which tax regime is best suited for you. This will not only help with tax planning. but also plan your retirement and other financial plans.
The tax calculator is very easy to use. All you’ve to do is enter the details it asks for, including your income, expense, insurance, savings, and investment information, and the calculator will do all the calculations for you.
The online calculator will simplify the process of tax calculation under the old as well as new tax regimes, by deciding which option suits them more, in a couple of minutes.
The online income tax calculator can be used as many times as you want free of cost.
As discussed earlier, the income tax calculator will help taxpayers determine the outflow of tax for the financial year by collecting data regarding their income, savings, insurance, and other related expenses.
Here are the steps to use an online tax calculator.
Enter your annual monthly income in the given box.
Now enter your monthly rent, house rent allowance, loans, and fees, if any, in the respective sections allotted for each.
Here, you’ll be asked about your mutual funds, insurance, and investments-related questions. Enter the details in the respective boxes.
This is the final stage where the total tax is calculated as per the new and the old schemes. It also chalks out how much must be invested for effectively saving you taxes by suggesting you the best tax-saving investment plans. You can also change your entered values in any step.
The income tax slab rates are determined by the Income Tax Act of India and are revised every year during the budget announcement. This categorization is on the basis of an individual’s income and age.
The old tax regime was largely focused on high-income earners, whereas the new tax regime benefits middle-class taxpayers with taxable income up to Rs. 15 lacs.
Annual Income | Below 60 years | Above 60 years | Above 80 years |
Rs 0.0 to Rs 2.5 Lakhs | NIL | NIL | NIL |
Rs 2.5 lakhs to Rs 3.00 Lakhs | 5% (tax rebate u/s 87a is available) | 5% | 5% |
Rs. 3.00 lakhs to Rs 5.00 Lakhs | 5% (tax rebate u/s 87a is available) | 5% | 5% |
Rs. 5.00 lakhs to Rs 7.5 Lakhs | 10.00% | 10.00% | 10.00% |
Rs 7.5 lakhs to Rs 10.00 Lakhs | 15.00% | 15.00% | 15.00% |
Rs 10.00 lakhs to Rs. 12.50 Lakhs | 20.00% | 20.00% | 20.00% |
Rs. 12.5 lakhs to Rs. 15.00 Lakhs | 25.00% | 25.00% | 25.00% |
Above Rs. 15 Lakhs | 25.00% | 25.00% | 25.00% |
Under Section 115BAC of the Income Tax Act, the following exemptions are not allowed under the new tax regime:
Under section 10(14) of the Income Tax Act, the following allowance shall be allowed:
An income tax calculator can help you evaluate your taxes in just a few minutes. Apart from that, it also shows an effective tax savings plan based on the information you have provided.
The income tax slab rates are determined by the Income Tax Act of India and are revised every year during the budget announcement. This categorization is on the basis of an individual’s income and age.
The old tax regime was largely focused on high-income earners, whereas the new tax regime benefits middle-class taxpayers with taxable income up to Rs. 15 lacs.
If the taxpayer’s income is 10 lakhs, they have to file their income tax at 15%.
If the taxpayer’s income is 5 lakhs, they have to file their income tax at 5%.
In India, if the income of an individual below 60 years of age is above Rs. 2.5 lakhs they have to file income tax returns.
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