Income Tax Calculator Online

What is An Income Tax Calculator?

An income tax calculator is a tool which helps you to make simple tax calculations. It can be used to determine the approximate amount that you are liable to pay as tax on the income that you have earned over a financial year.

The income tax calculator gives you an estimate of your taxable income and the tax payable once you provide the necessary details to the tool. It may not give you an exact figure, but using an income tax calculator helps you to plan your taxes in a better way.

How is Your Income Tax Calculated?

In India, the income tax is not the same for all individuals. The income tax is calculated on the basis of the tax slabs. However, after the announcement of the Budget 2020, a new tax regime has been introduced by the Finance Minister of India.

The new tax slabs and the tax rates for the financial year 2020-21 are as follows 

Features of the new tax regime: The foremost thing is that the new tax regime is optional, and you can continue with the old tax regime. The new regime has removed around 70 deductions, which could be claimed to reduce your overall tax obligations. This includes the common exemptions such as Leave Travel allowance (LTA), Section 80 C deductions such as investment in PPF, ELSS, EPF etc, Section 80 D deductions, like payment of medical insurance premium along with other deductions: interest on saving account under Section 80TTA, interest for educational loan repayment under Section 80E, donations under Section 80G and additional interest on housing loan under Section 80EEA. The new regime, however, allows to claim employer’s contribution to the National Pension Scheme (NPS) as deduction.

Old tax regime: Here is a look at the Income Tax Slabs & Rates for Individual Taxpayers & HUF (Less Than 60 Years Old) under the old tax regime

Some of the important deductions allowed under the old tax regime are :

1. Section 80C deductions: These include premium paid for life insurance, principal repayment for home loan, expenses for children’s tuition fees, investments in NSC,PPF, EPF,ELSS etc. subject to the specified limits. 
2. Section 80CCC deduction : This provides for exemption on the amount invested in a pension plan of a life insurance company, again based on the specified limit.
3. Section 80D deduction : You can claim a maximum deduction of Rs 25,000 in a financial year for premium payments - by any mode other than cash - for a health insurance policy.
4. Section 80DD deductions: As a taxpayer, you can claim deductions - subject to the specified limit- for expenses incurred on medical treatment of a dependent and disabled family-member.
5. Section 80E deduction : This includes interest paid on educational loans, based on the fulfillment of prescribed conditions.
6. Section 80G deductions: If you have made donations to the specified institutions, you are allowed to claim deductions under this category. The limit can range from 50% to 100%.
7. Income tax exemptions: Under the provisions of the Income Tax Act, 1961, as a taxpayer, you can claim exemptions - subject to fulfilment of conditions and based on the specified limits - on House Rent Allowance (HRA), LTA, per-diem, gratuity, leave encashment, withdrawal from PF and PPF, and so on.

Comparison of old and new tax regime : If you plan to opt for the new income tax regime for the financial year 2020-21, here’s how it will work in different scenarios.

1. Low Income Taxpayer

Consider that Mr. Amit’s taxable income is INR 8.2 Lakhs and he plans to opt for the new tax regime. Now, Mr. Amit does not claim for many deductions. The deductions he claimed for are as follows -

• Standard deductions: INR 50,000
• Under Section 80C: INR 1.5 Lakhs
• Medical insurance: INR 20,000
• Total deductions: INR 2.2 Lakhs

Based on this, the tax to be paid is as follows -

• Tax to be paid (old structure): INR 33,800
• Tax to be paid (new structure): INR 49,920

2. Taxpayer With High Deductions

Consider that Ms. Nikita’s taxable income is INR 11 Lakhs and she plans to opt for the new regime when filing her tax for the assessment year 2020-21. The deductions she claims for are as follows -

• Standard deductions: INR 50,000
• HRA: INR 1.68 Lakhs
• Under Section 80C: INR 1.5 Lakhs
• Medical insurance: INR 50,000
• Total deductions: INR 4.18 Lakhs

Based on this, the tax to be paid is as follows -

• Tax to be paid (old structure): INR 50,856
• Tax to be paid (new structure): INR 98,800

3. High Income Earner

Let us consider that Mr. Seth’s taxable income is INR 38 Lakhs and the deductions he claims for are as follows -

• Standard deductions: INR 50,000
• Under Section 80C: INR 1.5 Lakhs
• Home loan interest: INR 1.8 Lakhs
• Medical insurance: INR 12,000
• Donations: INR 25,000
• Total deductions: INR 4.17 Lakhs

Based on this, the tax that he will have to be pay is as follows -

• Tax to be paid (old structure): INR 8.60 Lakhs
• Tax to be paid (new structure): INR 9.12 Lakhs

As a matter of fact, you (the taxpayer) have the liberty whether you want to switch to the new tax regime depending on your financial conditions. For those who have been availing tax benefits under Section 80C investments and house rent allowance will not benefit from the new tax regime.

Income Tax for Senior Citizens

Here is a look at the old tax regime for senior citizens (60 Years Old or More but Less than 80 Years Old)

To understand the tax implications for a senior citizen, consider the following example -

Imagine that Mr. Keshav’s taxable income is INR 9 Lakhs and he has been filing his tax under senior citizen pensioner. The deductions claimed by him are as follows -

• Standard deductions: INR 50,000
• Under Section 80C: INR 1.5 Lakhs
• Interest Income under Section 80TTB: INR 50,000
• Total deductions: INR 2.5 Lakhs

Based on this, the tax paid by him will be as follows -

• Tax to be paid (old structure): INR 41,600
• Tax to be paid (new structure): INR 59,800

As a law abiding citizen, it is your responsibility to pay taxes on time. Moreover, filing ITR on time can ease your loan approval, visa processing and help you avoid penalties.

You can easily calculate your taxable income and tax payable by using an income tax calculator at Finserv MARKETS.

How to Use the Income Tax Calculator?

The steps to use our tool are as given below –

• Choose your age bracket to determine your tax slab
• Enter your annual salary including all your bonuses and variable components
• Enter your investment amount under section 80C and 80CCD(1B)
• Enter your medical insurance premium under section 80D
• If you live in a rented house, enter your HRA exemption.
• If you have a home loan, enter the interest paid as it is eligible for tax deduction
• If you have an educational loan, enter the interest paid, as it is eligible for income tax deduction.

By filling in all the required details in the income tax calculator, you can easily get an estimate of your taxable income and tax payable.

Tax Benefits for Home Loans and Investment in ULIPs

In order to incentivize the tax-paying and law-abiding citizens, the government provides certain benefits to the individual tax-payers. These benefits are in the form of tax-saving. You save some tax if you make any of the prescribed investment or expenditure. For instance, a person in the 30% tax bracket, can end up saving Rs 46,800 if s/he utilizes the benefits under Section 80C of the Income Tax Act, 1961.

Let us take a look at two such benefits that you can avail:

Home Loan Tax Benefits

Nowadays, due to the price hike in the real estate sector, a large number of individuals are availing a home loan to purchase their dream house. The good news is that there are various tax benefits that can be availed on a home loan.

• For home loans, both principal and the interest paid are eligible for tax deduction.
• Under section 80C of the Income Tax Act, home loan borrowers are eligible for a deduction of Rs.1,50,000 on the principal amount of the home loan. Also, stamp duty charges and registration charges are eligible for tax deduction under section 80C.
• At the same time, under section 24 of the Income Tax Act, a maximum deduction of Rs. 2 Lakhss can be availed on the interest paid towards the home loan. However, this tax benefit can be availed only if the borrower has the possession of the house.

You must note that all home loan tax benefits are valid only if the construction of the purchased property is complete.

Tax Benefit on ULIPs

A Unit Linked Insurance Plan (ULIP) is a product offered by insurance companies that provides the investors both insurance and investment under a single integrated plan. ULIP plans give you the flexibility to invest your money as per your risk-appetite and financial needs. Since ULIP plans also provide a life cover, you get the flexibility of choosing your sum assured at the beginning of your policy. One of the major advantages of investing in a ULIP plan is liquidity. After the lock-in period, you can opt for partial withdrawals in case of unforeseen events. By investing in ULIPs, you can avail several tax benefits:

• Under section 80(C) of the Income Tax Act, the investments made in ULIPs are eligible for tax deductions. A maximum deduction of Rs 1.5 Lakhss can be availed under section 80C of the Income Tax Act.
• Since ULIP also provides life cover, deduction is available on life insurance too. Under Section 80C, up to 10% of the sum assured or annual premium, whichever is lower can be availed, subject to a maximum limit of Rs. 1.5 Lakhss.
• You can also receive a tax-free Maturity Benefit, under Section 10 (10D).