Income Tax Calculator Online

What is an Income Tax Calculator?

An income tax calculator, as the name suggests, is a tool that simplifies the tax calculation process. It can be used to determine your total tax liability on the income earned in a given financial year. You need to enter the relevant details in the taxable income calculator for it to compute the estimated tax payable.

Let us understand how to use the Income Tax Calculator for FY2021 on Finserv MARKETS in detail.

How to Use the Income Tax Calculator 2021?

Follow these steps to use the Income Tax Calculator:

1. Select the financial year for which you intend to calculate tax.

2. Choose your age, as it helps the calculator determine your tax slab.

3. Select your gender and city of residence.

4. Enter your annual income from all sources (salary, rent, agriculture, etc.).

5. If you intend to file your tax as per the old income tax regime, enter the investments made under Section (u/S) 80C (max. ₹1.5 lakh) of the Income Tax Act, 1961.

6. Enter your NPS investment (max. ₹50,000) under Section 80CCD(1B).

7. Enter your health insurance premium under Section 80D.

8. If you live in a rented house, enter your HRA amount as stated in the tax computation on your pay slip.

9. If you have a home loan, enter the interest paid (max. ₹2 lakh) under Section 24. To understand whether you can claim both HRA and home loan interest deduction, refer to this article.

10. If you have an educational loan, enter the interest paid under Section 80E.

11. Enter the interest earned from savings accounts (max. ₹10,000) under Section 80TTA.

12. If you are a senior citizen, enter the interest earned from senior citizen deposits (max. ₹50,000) under Section 80TTB.

13. Click on the ‘Calculate Tax’ button to know your estimated tax liability.

What are Income Tax Slabs?

The Government of India levies income tax on individual taxpayers based on the income tax slab. In simple terms, different tax rates are associated with different income ranges. The tax rates will increase as the total annual income earned by a taxpayer increases. We have three categories of income taxpayers in India:

• Individuals below 60 years

• Senior citizens (people between the age of 60-80 years)

• Super senior citizens (people above 80 years of age)

Income Tax Slabs and Rates for Individuals Below 60 Years

With the Union Budget 2020, the Finance Ministry of India released a new income tax structure that came into effect from April 1, 2020. However, this new income tax regime is optional and taxpayers have the liberty to either opt for it or continue using the old income tax structure at the start of each financial year (FY).

The following table gives a brief overview of the two income tax slabs for individual taxpayers below 60 years of age.

Income Tax Slabs and Rates for Senior Citizens

Taxpayers above the age of 60 but less than 80 years are considered as senior citizens as per the Income Tax Act. The following table gives an overview of the income tax slabs and rates (old and new) for senior citizens.

Income Tax Slabs and Rates for Super Senior Citizens

Taxpayers above the age of 80 years are considered as super senior citizens as per the Income Tax Act. The following table gives an overview of the income tax slabs and rates (old and new) for super senior citizens.

Note: Taxpayers who choose the new income tax regime will not be able to benefit from the various tax deductions and exemptions offered under the different sections of the Income Tax Act. Check income tax deductions and exemptions to know about these in detail.

New Income Tax Regime vs. Old Income Tax Regime: Illustrations

Understanding how to calculate your income tax can be tedious. To make this simpler, we have drafted two scenarios that will help you understand the new and old income tax slabs and rates better.

Scenario 1: New Income Tax Regime is Better

Let us assume that Amit’s total annual income is ₹12 lakh. The following table outlines the tax calculation based on his salary and deductions as per the old and new income tax structure.

In this scenario, the new income tax regime is beneficial for Amit in comparison to the old slabs and rates. However, if Amit claims deductions and exemptions offered for medical insurance premiums, NPS investment, education loan, etc., the old tax regime will help him save more of his hard-earned money. Let’s consider that with another example.

Scenario 2: Old Income Tax Regime is Better

Let us assume that Keshav's total annual income is ₹12 Lakhs too. However, unlike Amit, Keshav chooses to claim most of the deductions offered under the old income tax regime. The following table outlines the tax calculation based on his salary and deductions as per the old and new income tax structure.

^{*House Rent Allowance (HRA) varies based on an individual’s basic salary and their city of residence.}

In this scenario, the old income tax regime is quite beneficial in comparison to the new tax structure. However, if Keshav claims lower deductions on tax-saving tools, the new tax regime will help him save more money when filing ITR. If you need help filing your ITR through the new e-Filing portal, check out “How to File ITR” on Finserv MARKETS.

Additionally, those who fall in the income bracket of between ₹5-10 Lakhs and claim no deductions (apart from standard deduction) will highly benefit from the new income tax structure. On the other hand, people who fall under the income bracket of above ₹15 Lakhs might benefit from the old income tax regime.

It goes without saying that each taxpayer should calculate their tax liability and factor in deductions from their tax-saving tools before opting for either of the tax regimes.

Surcharges on the Tax Rates: Old vs. New

The following table gives a brief overview on the surcharges applicable on the old and new income tax regimes.

Tax Rebate under Section 87A

Section 87A is a legal provision that provides a tax rebate under the Income Tax Act, 1961. It was implemented post the Financial Act, 2013, and is known to provide tax relief to individuals earning below a certain income threshold.

As per Section 87A, any resident Indian individual with income below ₹5 Lakhs is eligible to claim a tax rebate, subject to a maximum of ₹12,500. Therefore, any person earning less than ₹5 Lakhs in total taxable income is eligible to avail a full income tax rebate. However, note that this rebate is available only to individuals and not businesses and is calculated before adding the health and educational cess of 4%.