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What is an Income Tax Calculator?

An online income tax calculator is a tool that helps you evaluate your tax liability based on your total income after the Union Budget. The Union Budget will help you determine whether you fall under the taxable income group or not. You can either pay your taxes as TDS (tax deducted at source) or through the income tax returns portal.

How to Use the Online Income Tax Calculator?

Follow the below steps to calculate your tax liability:

 

  • Choose the financial year you want to calculate your taxes for

  • Select your age since the tax liability in India differs based on age groups

  • Select your gender, city of residence (metro or non-metro), enter your annual income, and click on ‘Next’

  • In case you’ve made any tax-saving investments, you need to enter the amount

  • Enter other details like House Rent Paid, Interest on Home Loan, Interest on Education Loan, Health Insurance Premium, etc.

  • Once you’ve filled in the appropriate details, click on ‘Calculate Tax’.

Our online income tax calculator will provide you with the details on taxable income and tax payable.

Note: If any section doesn’t apply to you, you can enter ‘0’.

How to Calculate Income Tax?

Income from salary is a sum of Basic salary and allowances like HRA, Travel Allowance, Leave Travel Allowance, etc. The Income Tax Act, 1961 provides tax exemptions on multiple components of your salary like HRA, leave travel allowance, children’s education allowance, etc.

Along with the aforementioned exemptions, a standard deduction of Rs. 50,000 is deducted from your total income. However, you cannot avail these tax deductions and exemptions if you opt for the new tax regime.

Let’s understand how income tax is calculated under the old tax regime and new tax regime with an example.

Rucha, a 29-years-old Web Designer earns Rs. 1,30,000 each month. Out of which, Rs. 20,000 is HRA, Rs. 25,000 is a special allowance and Rs. 20,000 is a leave travel allowance. If you subtract the allowances, her basic pay is Rs. 65,000. Rucha lives in Mumbai and pays a rent of Rs. 20,000 per month.

 

Nature of Income

Amount

Exemption/Deduction

Taxable (Old Regime)

Taxable (New Regime)

Basic Salary

₹7,80,000

-

₹7,80,000

₹7,80,000

HRA

₹2,40,000

₹1,62,000

₹78,000

₹2,40,000

Special Allowance

₹3,00,000

-

₹3,00,000

₹3,00,000

LTA

₹2,40,000

₹1,20,000 (bills submitted)

₹1,20,000

₹2,40,000

(-) Standard Deduction

-

₹50,000

₹50,000

-

Gross Total Income from Salary

 

 

₹12,28,000

₹15,60,000

 

Now that you know how to compute your taxable income from salary, let us also include income from other sources as well to understand your tax liability. Income from other sources includes:

 

  • Income house property (rental income or interest paid on home loan)

  • Income from capital gains (sale purchase of share or house)

  • Income from business/profession (freelance projects, business, or profession)

  • Income from other sources (savings account interest, fixed deposit interest, interest from bonds)

Rucha earned Rs. 8000 from her savings account and Rs. 12,000 from FD during that year. However, she made a few tax-saving investments like PPF of Rs. 50,000 and ELSS of Rs. 20,000. Additionally, she paid a LIC premium of Rs. 10,000 and medical insurance premium of Rs. 10,000. 

 

Nature

Maximum Deduction

Eligible Investments/Expenses

Amount Claimed by Rucha

Section 80C

₹1,50,000

50,000 (PPF) + 20,000 (ELSS) + 10,000 (LIC premium) + 93,600 (EPF = 65,000 x 12% x 12)

₹1,50,000

Section 80D

₹25,000 for self and ₹50,000 for parents

Medical insurance premium of ₹10,000

₹10,000

Section 80TTA

₹10,000

Interest from savings account ₹8000

₹8000

 

Calculation of gross taxable income as per the old tax regime

 

Nature

Amount

Total

Income from salary

₹12,28,000

 

Income from other sources

₹20,000

 

Gross total income

 

₹12,48,000

Less Deductions

 

 

80C

₹1,50,000

 

80D

₹10,000

 

80TTA

₹8000

₹1,68,000

Gross taxable income

 

₹10,80,000

 

Calculation of gross taxable income as per the new tax regime

 

Nature

Amount

Total

Income from salary

₹15,60,000

 

Income from other sources

₹20,000

 

Gross taxable income

 

₹15,80,000

 

The above computation is an example of how evaluating your taxable income can be time consuming. Hence, it is always advisable to fast-track the process of computing tax liability using an online income tax calculator.

Exemptions and Deductions Disallowed Under the New Tax Regime

Individuals and HUFs opting for the new tax regime under Section 115BAC of the Income Tax Act cannot avail the following tax exemptions:

 

  • Leave travel concession

  • House rent allowance (HRA)

  • Some allowances mentioned under clause (14) of Section 10

  • Allowances to MPs/MLAs as mentioned in clause (17) of Section 10

  • Exemption for SEZ unit

  • Allowance for the income of minor

  • The standard deduction, a deduction for entertainment allowance, and employment/professional tax (PT)

  • Interest on the self-occupied or vacant property as referred to in sub-section (2) of Section 23

  • Additional depreciation under Section 32

  • Deductions under Sections 32AD, 33AB, and 33ABA

  • Deductions for donation for or expenditure on scientific research

  • Deduction under Section 35AD and 35CCC

  • Deduction from family pension

  • Any deduction under chapter VI-A, i.e. Section 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80GG, 80-IAB, 80-IAC, etc. However, deductions under sub-section (2) of Section 80CCD and Section 80JJAA can be claimed.

Here’s a list of allowances under Section 10(14) of the Income Tax Act.

 

  • Transport allowance provided to a specially-abled employee to meet commuting expenses

  • Conveyance allowance provided to meet the expenses incurred in performing office duties

  • Allowances granted to meet the cost of travel for transfer or on tour

  • Daily allowance granted to cover the daily expenses incurred on instances when the employee is absent from his/her normal place of duty

Income Tax Slabs Under New and Old Tax Regime

With the introduction of a new tax slab, you have the option of choosing between new and old income tax regimes. However, you can choose to avail the new scheme only while filing your income tax returns. Let’s compare the new tax regime with the old tax regime.

New Tax Regime Vs Old Tax Regime

 

Sr. No.

Income 

New Tax Regime

Old Tax Regime

1.

Up to ₹2,50,000

Nil

Nil

2.

From ₹2,50,001 to ₹5,00,000

5%

5%

3.

From ₹5,00,001 to ₹7,50,000

10%

20%

4.

From ₹7,50,001 to ₹10,00,000

15%

20%

5.

From ₹10,00,001 to ₹12,50,000

20%

30%

6.

From ₹12,50,001 to ₹15,00,000

25%

30%

7.

Above ₹15,00,000

30%

30%

 

What are the Sources of Income?

According to the rules and regulations set by the Income Tax Department of India, an individual is allowed to have 5 sources of income at all times, i.e. salary, capital gains, income from house property, business income, and income from other sources. Every kind of income is taxable, provided you categorise each income under the above income sources.

Income from Salary

Income from salary is one of the sources of income listed by the Income Tax Department. You can make use of an online income tax calculator to evaluate your tax liability on salary.

To calculate your income from salary, you need to make use of the TDS certificate, which is a part of Form 16. Your employer is liable to provide you with a Form 16. Here’s how you evaluate your income from salary once you receive the form:

 

Step 1: Collect all your salary slips and Form 16 of the current financial year before you go on to evaluate.

 

Step 2: Add all your stipends and allowances, i.e. the basic salary, TA, DA, HRA, reimbursements, leave travel allowance, etc., mentioned in your payslip as well as Form 16 (Part B). Once you have added the aforementioned values, add your bonus as well. The total value you arrive at here is called the gross salary.

 

Step 3: Make deductions like HRA, standard deduction of Rs. 50,000, leave travel allowance, and other applicable exemptions from your salary. The figure you arrive at after deducting applicable exemptions is your net income.

Income from House Property

Income from house property is basically the rental payment received by an assessee every month. If you own just one house property, and it is self-occupied, you still have to compute the total income through the property.

Steps to calculate the Gross Annual Value of your rented house property:

 

Step 1: Take the Fair Market Value of the property into account and the valuation provided by the municipal authorities. You must take the amount that is higher in value and this is the expected rent.

 

Step 2: Compare the above value with the amount you receive, and that will give you the Gross Annual Value of the property.

 

Step 3: Deduct the taxes already paid during the Gross Annual Value year and compute the Net Annual Value (NAV). Deduct the same from your NAV to understand if it is a loss or income from house property.

Income from Capital Gains

The nature and number of transactions play a huge role in determining the computation of income from capital gains. Here’s how you can evaluate it:

 

  • Calculate your long-term capital gains from the sale of assets.

  • Evaluate your short-term capital gains from the total sales of capital assets.

  • Claim deductions once you have evaluated the above factors.

Income Tax Tools & Articles

Income Tax Deduction & Exemptions

GST & E way Bill

FAQs on Income Tax Calculator

✔️How is income tax calculated?

To calculate your income tax liability, you first compute your taxable income (by deducting exemptions and deductions from the total income). Once you have evaluated the taxable income, you have to identify the tax slab you belong to and deduct the specified portion as tax.

✔️What is an income tax calculator?

An online income tax calculator is an easy-to-use tool that helps you compute your tax liability according to the Union Budget.

✔️How to use an income tax calculator for FY 2021-22?

Here’s how you can use the online income tax calculator for the year 2021-22:

  • Choose the financial year you want to calculate your taxes for

  • Select your age (in India, your tax liability depends on your age, hence it is imperative to fill in your correct age)

  • Select your gender, city of residence (metro or non-metro), enter your annual income, and click on ‘Next’

  • If you’ve made any tax-saving investments, enter the amount

  • Enter other details like House Rent Paid, Interest on Home Loan, Interest on Education Loan, Health Insurance Premium, etc.

  • Once you’ve filled in the appropriate details, click on ‘Calculate Tax’.

You will get details on taxable income and tax payable. In case any section isn’t applicable to you, enter ‘0’.