[ecis2016.org] This is the complete guide on how to calculate the accurate tax amount on your current income.
To calculate the income tax, there is no need to visit a chartered accountant. The facility to calculate the income tax has been made available online by the Income Tax Department, through its online Income Tax Calculator. This Income Tax Calculator helps you know the exact amount of income tax you will have to pay for the current year.
How to use the Income Tax Calculator FY 2021 – 22 (AY 2022 – 23)?
Follow the steps given below to make use of the Income Tax Calculator by the Income Tax Department.
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Step 1: Visit the official website of the Income Tax Department. On the main page, you will find ‘Taxpayer Services’ option. Click on it.
Step 2: On the bottom of the page, you will see ‘Tax Calculator’.
Step 3: Click on the tax calculator option to proceed. The Income Tax Calculator will now open.
Step 4: Choose the assessment year for which you want your taxes to be calculated.
Step 5: Select the type of tax payer that you are. Tax payers are divided into the following categories: Individual, HUF, Firms, LLP, Co-Operative Societies, AOPs/BOI, Domestic Company, Foreign Company, etc.
Step 6: You need to select ‘yes’ if you are opting for taxation under Section 115BAC. This means your income tax will be calculated based on the new tax regime.
Step 7: Select male, female, or senior citizen from the options available.
Step 8: Now select your residential status from resident or non-resident.
Step 9: State your income from salary before exemptions.
Step 10: Now provide details of other incomes like income from house property, income from other sources, capital gains, gains and profits from business or profession, agricultural income, etc.
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Step 11: Now, state the deductions you want to claim.
Step 12: You will have to provide additional details like:
Total Tax Liability
Due date of submission of return
Actual date of submission of ITR/date of completion of assessment
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Relief other than relief u/s 87A
TDS/TCS/MAT (AMT) credit utilised
Details of tax paid
Step 13: Click on ‘Calculate’ to get your tax.
Note: You also have the option to enter your salary without availing of any exemptions if you wish to know your income tax liability under the new tax slabs. Also, you can enter “0” in fields that are not applicable to your income tax calculation.
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How to calculate income tax?
Meera Rana has an annual income of Rs 10 lakhs per annum. Let us find out her income tax liability under the old tax regime.
Income tax under old tax regime
Gross annual income: Rs 10 lakhs
Standard deduction: Rs 40,000
Section 24: Rs 2 lakhs (home loan interest payment)
Section 80C: Rs 1.50 lakhs
Section 80D (health insurance): Assuming it is zero
Other exemptions: Assuming they are all zero
Total taxable amount = Rs 10 lakhs – Rs 40,000 – Rs 2 lakhs – Rs 1.50 lakhs = Rs 6,10,000
Now, Rana falls under the Rs 5 lakhs-Rs 7.5 lakhs tax bracket.
Split Rs 6,10,000 for tax calculation:
Rs 2.5 lakh (@0%) = 0
Rs 2.5 lakh (@5%) = Rs 12,500
Rs 1,10,000 (@20%) = Rs 22,000
Total = Rs 34,500
+ cess (@4%) = Rs 1,380
Final tax = Rs 35,800
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Income tax calculation under new regime
Gross annual income: Rs 10 lakhs
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Total taxable amount: Rs 10 lakhs
Now, Rana’s income falls under Rs 7.5 lakhs-10 lakhs tax bracket.
Split Rs 10 lakh for tax calculation:
Rs 2.5 lakh (@0%) = 0
Rs 2.5 lakh (@5%) = Rs 12,500
Rs 2.5 lakh (@10%) = Rs 25,000
Rs 2.5 lakh (@15%) = Rs 37,500
Total = Rs 75,000
+ cess (@4%) = Rs 3,000
Final tax: Rs 78,000
Computation of total income and tax liability for the year
|Income from salary||XXXXX|
|Income from house property||XXXXX|
|Profits and gains from business or profession||XXXXX|
|Income from other sources||XXXXX|
|Total head-wise income||XXXXX|
|Set off losses||XXXXX|
|Gross total income||XXXXX|
|Less: Deductions under Chapter VI-A||XXXXX|
|Total income (i.e., taxable income)||XXXXX|
|Tax on total income, computed at the applicable rates||XXXXX|
|Less: Rebate under Section 87A||(XXXXX)|
|Tax liability after rebate||XXXXX|
|Tax liability after addition of surcharge||XXXXX|
|Add: Health and education cess @4% on tax liability after surcharge||XXXXX|
|Tax liability before rebate under Sections 86, 90, 90A, 91||XXXXX|
|Less: Rebate under Sections 86, 89, 90, 90A, 91||XXXXX|
|Tax liability for the year before pre-paid taxes||XXXXX|
|Less: Prepaid taxes in the form of advance tax, TDS and TCS||XXXXX|
Deductions not allowed under the new Income Tax regime
- Individuals who opt for the new tax regime under Section 115BAC need to forgo a total of 70 deductions and tax exemptions. These include:
- Leave travel concession under Section 10, Clause (5)
- House rent allowance under Section 10, Clause (13A)
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- Allowances under Section 10, Clause (14)
- Allowances to MPs/MLAs under Section 10, Clause (17)
- Allowance for the income of minor under Section 10, Clause (32)
- Exemption for SEZ unit under Section 10AA
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- Deduction for entertainment allowance, standard deduction and employment/professional tax under Section 16.
- Interest under Section 24 with respect of self-occupied or vacant property referred to in Sub-section (2) of Section 23.
- Also, loss under the head income from house property for the rented house is not allowed to be set off under any other head and would be allowed to be carried forward unlike the old regime.
- Additional deprecation under Section 32, Sub-section (1), Clause (ii-a)
- Deductions under Section 32AD, 33AB, 33ABA
- Deductions for donation for or expenditure on scientific research contained in sub-clause (ii) or sub-clause (ii-a) or sub-clause (iii) of sub-section (1) or sub-section (2AA) of Section 35.
- Deduction under Section 35AD or Section 35CCC
- Deduction from family pension under Section 57
- Any deduction under Chapter VIA (like section 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, Section 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, etc.)
- Deduction under Sub-section (2) of Section 80CCD (employer contribution on account of the employee in notified pension scheme) and Section 80JJAA (for new employment) can be claimed.
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Deductions allowed to individual opting for new tax regime
- Transport allowance for a divyang employee
- Conveyance allowance, to meet the conveyance expenditure incurred in performance of duties of an office
- Any allowance to meet the cost of travel on tour or on transfer.
- Daily allowance, to meet the ordinary daily charges incurred by an employee, on account of absence from his normal place of duty.
Common questions on Itax calculation
Is everyone required to file a tax return?
Anyone who is earning an income of up to Rs 2.50 lakhs is not liable to file tax returns. However, such people also need to file Income Tax Returns (ITR) in case they want to claim income tax refund. Anyone earning more than Rs 2.50 lakhs as annual income needs to file tax returns.
How much of my salary is non-taxable?
From your entire salary, whatever it may be, Rs 2.50 lakhs is completely tax-free. On income above this, various tax slabs are applicable. However, you can claim deductions under various sections of the Income Tax Act. Some of these Sections include Section 80C (Rs 1.50 lakhs), Section 24 (Rs 2 lakhs), Section 80EEA (Rs 1.50 lakhs), etc.
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What information is required to file ITR online?
Here are the details you need to file your ITR online:
- PAN details
- Aadhaar details
- Residential address details
- Bank account details
- Income proofs (salary details, income from investments, income from house property)
- Deductions claimed under various sections of Income Tax
- Tax payment details
How much tax will be deducted from my salary?
Income Tax percentage in India is dependent on the income slab you fall under. Check out your income slab to know the percentage of your income that will be deducted from your salary as income tax.
Income tax rates for individuals under 60 years
|Taxable income slab||Existing rate||New rate|
|Up to Rs 2.5 lakhs||Nil||Nil|
|Rs 2.50 lakhs to Rs 5 lakhs||5%||5%|
|Rs 5 lakhs to Rs 7.5 lakhs||20%||10%|
|Rs 7.5 lakhs to Rs 10 lakhs||20%||15%|
|Rs 10 lakhs to Rs 12.5 lakhs||30%||20%|
|Rs 12.5 lakhs to Rs 15 lakhs||30%||25%|
|Rs 15 lakhs and above||30%||30%|
Income tax under new regime
If your total taxable income is Rs 7.50 lakhs after deduction of all exemptions, the following will be your Income Tax Liability:
Income tax calculator
Break-up of income ton Rs 10 lakhs taxable income
|Income||Percentage of income tax||Taxable income||Tax in Rs|
|Up to Rs 2.50 lakhs||No tax||None||None|
|From Rs 2.50 lakhs to Rs 5 lakhs||5%||Rs 2.50 lakhs||5% of Rs 2.50 lakhs = Rs 12,500|
|From Rs 5 lakhs to Rs 7.50 lakhs||10%||Rs 2.50 lakhs||10% of Rs 2.50 lakhs = Rs 25,000|
|From Rs 7.50 lakhs to Rs 10 lakhs||15%||Rs 2.50 lakhs||15% of Rs 2.50 lakhs = Rs 37,500|
|Total tax on Rs 10 lakhs income = Rs 75,000|
Does the income tax calculator calculate TDS?
The Income Tax Calculator does not compute the TDS.
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How many heads are there under which Income Tax is calculated?
Section 14 of the Income Tax Act has classified the income of a taxpayer under five heads, including: 1. Income from salary 2. Income from house property 3. Profits and gains from business or profession 4. Capital gains 5. Income from other sources
How to round off the total income before computing tax liability?
Your total income must be rounded off to the nearest multiple of ten. You need to first ignore any paisa. If the amount left is not in multiple of ten and the last figure in that amount is five or more, the amount should be increased to the next higher amount, which is in multiple of ten. If the last figure is less than five, the amount should be reduced to the next lower amount in multiple of ten. The amount rounded off would be deemed to be the total income of the taxpayer. Here is an example to understand it. Suppose Rahul’s taxable income is Rs 2,52,844.99. He needs to first ignore the paisa, that is 99 paisa. The remaining amount – Rs 2,52,844 -should be rounded off to Rs 2,52,840 as the last figure is less than five. If the total income was Rs 2,52,845, the income would be rounded off to Rs 2,52,850 as the last figure is five or above.
Can I claim the deduction for my personal and household expenditure while calculating my taxable income or profit?
No, you cannot claim the deduction for personal expenses while computing the taxable income. While computing income under various heads, the deduction can be claimed only for the expenses, which are provided under the Income Tax Act.
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