Income Tax Calculator

Introduction

How to calculate income tax? Which income tax slab do you fall under? Many such questions can be answered with an income tax calculator that displays your income tax due for a specific fiscal year.

What is Income Tax Calculator?

An income tax calculator is a web-based application that calculates the amount of taxes payable on your earnings. It allows you to calculate your taxable income, deductions, and exemptions based on the income tax slabs of your regime.
Then, basis the old or new tax regime the calculator determines your expected income tax liability using the tax rates and brackets as prescribed by the government for the financial year. This income tax calculation comes in handy for you to organize your finances and be ready for the tax season.

Understanding Income Tax Calculation

A clear understanding of Income Tax Calculation can speed up the process of filing income tax.

You must, first, identify their gross income before calculating income tax. Gross income is the total of all sources of income, including salary, rent, interest, capital gains, etc.

After determining their gross income, you can deduct certain expenses/exemptions/deductions under Sections 80C, 80D, 80G, and other provisions of the Income Tax Act. Some examples of these deductions are:
Payments for health insurance premiums, gifts to non-profit organizations, investments made in tax-saving instruments, interests, and premiums on home loans.

Then, comes the taxable income. Your taxable income is calculated after the deduction of the allowable expenses.

Moving forward, the tax rate applicable to your taxable income is determined by the tax regime that they have chosen.

How to Calculate Income Tax for FY 2022-23?

The amount of tax due is determined by your overall taxable income after deductions, exemptions, income tax bracket, and the tax regime you have chosen.

Taxable Income = Gross Total Income – Total Exemptions – Total Deduction.

Once you know your taxable income, all you have to do is refer to income tax for the category you fall under in the tax regime you have opted for.

Income Tax slabs under Old V/s New Tax regime (FY 2022-23)

For those who were younger than 60 at any moment in the preceding year:

For people who were 60 or older but under 80 at any moment in the preceding year:

For everyone who turned 80 or older at any point in the preceding year:

Calculating Income Tax for the Old Tax Regime

Calculating your total income is the first step in figuring out your income tax under the old regime. Total income is the sum of all of your earnings, including those from a job, a business or profession, a home or other property, capital gains, and other sources.

Once you have calculated your total income, you can claim deductions and exemptions allowed under the Income Tax Act. After claiming all deductions and exemptions, you can calculate your taxable income. This is done by subtracting all deductions and exemptions from total income.

Once you have calculated your taxable income, you can determine your tax liability by using the tax slabs and rates prescribed by the government for the financial year.

Calculating Income Tax for the New Tax Regime

The new regime provides more tax slabs and lower rates than the old regime, but no exemptions. The new tax regime calculator makes it easier to calculate your tax liability.

Benefits of Filing Income Tax Online

Convenience: E-filing can be done from anywhere with an internet connection, making it a convenient option for you.

Faster processing: Income Tax Return (ITR) acknowledgment is prompt. Most importantly, refunds are processed more quickly than paper returns.

Accuracy: Paper filings are susceptible to mistakes as there is a potential for human error in data entry when a paper-based form is converted to a digital medium. But with built-in validations and electronic connectivity, e-filing software is seamless and significantly reduces mistakes.

Eligibility Criteria to File Income Tax

Any Indian citizen under the age of 60 years who earns more than 2.5 lakh rupees is required to pay income tax. If the individual is above 60 years of age and earns more than Rs.3 lakhs, they would have to pay taxes to the government of India. Also, the following entities that generate income are subject to paying direct taxes:

Artificial Judicial Figures

Corporate entities

Persons' Organization (AOPs)

Undivided Hindu Families (HUFs)

Companies

Local Government

Individuals Group (BOIs)

Income Tax Exemptions for Salaried Individuals (Under The New Tax Regime)
The new tax regime offers several exemptions and deductions that can be claimed for tax purposes, including:

Transport allowances for Divyang under 14(10)

Conveyance allowances for employment-related transportation expenses

Compensation for travel costs incurred during tours or transfers

House rent allowance exemption permitted either entirely or partially under 10 (13A)

80D permits you to deduct medical insurance premiums paid for yourself, your spouse, your children (up to Rs. 25,000/50,000), and your dependant parents (up to Rs. 25,000/50,000).

Daily allowances for expenses incurred while away from a regular place of duty

Perquisites for official purposes

Exemptions for voluntary retirement, gratuity, and leave encashment

Interest on home loan for let-out property (Section 24)

Gifts up to Rs. 5,000

Deduction for employer's contribution to NPS account (Section 80CCD (2))

Deduction for additional employee cost (Section 80JJA)

Standard deduction of Rs. 50,000 under the New Tax Regime is applicable from FY 2023-24

Deduction for expenses towards income from family pension under Section 57(iia)

Deduction for the amount paid or deposited in the Agniveer Corpus Fund under Section 80CCH (2)

Which details need to be provided while e-filing ITR?

Personal Details: You need to provide their personal details, including their name, address, and PAN card number.

Income Details: You must provide details of their income, such as salary, business income, capital gains, and income from other sources. They also need to declare any exempt income.

Bank Account Details: You must provide their bank account details, including the account number and IFSC code.

Deductions and Exemptions: You need to provide details of the deductions and exemptions they are claiming, such as investments under Section 80C, donations under Section 80G, and interest on home loans under Section 24.

Tax Payments: You need to provide details of the tax payments made during the year, including TDS, advance tax, and self-assessment tax.