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Income Tax Calculator

We all work to generate income through salaries, investments, and profits. We receive an income in exchange for a good or service or investment. For employed individuals, income is mostly in the form of salaries or wages. For businessmen, the income is the revenue generated through the business over some time.

The Central government and most state governments charge taxes on individual and business income. These are annual taxes levied on income and known as income tax. Businesses and individuals are expected to file income tax each year to determine if they owe any tax to the government.

The income tax computation is not just a one-step procedure, and incorrect computations may lead to errors. Hence, a taxpayer can always use a simple and easy tool to calculate the amount of tax payable. You can use this tool to give you an estimated amount of tax you will have to pay.  

What is the Income Tax Calculator?

The online Income Tax Calculator is a computation tool that is available online to allow quick and easy access to tax calculations. It allows you to find out how to calculate income tax on your income. The tax calculations are done as per the Income Tax laws of the prevailing land. You can take the assistance of this online Income Tax calculator for filing your tax returns. The exact calculation will be made as per the provisions contained in the relevant Acts. The income tax computation is based on various parameters like your income, investments, age, gender, and other factors.

Why should you choose an Online Income Tax Calculator?

As a taxpayer, you can use this online tax calculator tool to help you with all your tax calculation queries. Here are the reasons why you should choose an online Income Tax calculator:

  • This online tax calculator tool helps you to teach how to calculate income tax and does the tax calculations
  • It presents the approximate figures of income tax to be paid, using your income, deductions, and HRA figures
  • It makes the calculation of taxable HRA, taxable income from HRA and total deductions easier
  • It also computes gross taxable income and the total income tax liability for an individual or business for a given financial year
  • The total tax liability is calculated based on your net taxable income from different tax slabs
  • All information related to income tax computation is neatly displayed in the form of a tax summary table

How to use the Income Tax Calculator?

The online income tax calculator can be accessed on the website. You can easily follow the instructions associated with the calculator to get a general estimate of your taxable income and tax payable on that income for any assessment year. To get the desired computations in a detailed form, you just need to provide the required details to this online tax calculator option. Below are listed the detailed steps to use the Income Tax Calculator tool:

  • You need to select the financial year for which you need the taxes to be calculated.
  • You need to choose your age range from the choices provided: 
    • Up to 60 years
    • 60-80 years
    • Above 80 years of age
  • This determines your tax band, and accordingly, the tax computation will be done.
  • Enter your annual salary amount, along with the total salary, the various bonuses, and components of your salary in the box provided in the online tax calculator.
  • You need to enter the various components of deductions that you are taking care of- HRA, home loan, education loan, health insurance premium, 80C investments, etc. (whichever is applicable)
  • After you enter these details, you need to enter your investment information and amount in the subsequent fields marked ‘Section 80C'. This will calculate your deductions under Section 80C and 80CCD of the Indian Income Tax Act
  • If you have a health insurance policy, you need to fill in your details about the medical insurance premium for deductions under Section 80D
  • If you live in a rented property, enter your HRA amount for exemption
  • If you have a home loan you’re paying back, you need to enter the interest paid on it for deduction calculations
  • Similarly, if you have an educational loan for repayment, you need to enter the interest paid on it for deduction from taxable income
  • If any item of the deduction is not applicable, do not leave it blank but enter a zero or '0' value
  • After entering all the values in the fields correctly, you can click on "Compute" for the Income-tax computation results
  • You can view a separate Summary tab to view details about your taxable income and the tax payable

Income Tax Slab for the Financial Year 2019-20

The table given below shows the Income Tax Slab 2019-20.  The 2020 Union Budget has announced new tax regimes giving the taxpayers an option to pay their taxes according to the new tax slab from Financial Year 2020-21.

Regular slab for age group 0-60 years 

Income range per annum Old Tax Rate  New Tax Rate 
Up to Rs. 2.5 Lakh NIL NIL
Rs. 2.5 Lakh – 5 Lakh 5% 5%
Rs. 5 Lakh – 7.5 Lakh 20% 10%
Rs. 7.5 Lakh – 10 Lakh 20% 15%
Rs. 10 Lakh – 12.5 Lakh 30% 20%
Rs. 12.5 Lakh– 15Lakh 30% 25%
Above Rs. 15 Lakh 30% 30%

 

Senior Citizen Slab for the age group 60-80 years 

Income range per annum Tax Rate FY 2019-20 New Slab for FY 2020-21
Up to Rs. 3 lakhs No Tax No Tax
Rs. 3 lakh - Rs. 5 lakhs 5% 5%
Rs. 5 lakhs - Rs. 7.5 lakh 20% 10%
Rs. 7.5 lakhs- Rs. 10 lakhs 20% 15%
Rs. 10 lakhs - Rs. 12.5 lakhs 30% 20%
Rs. 12.5 lakhs - Rs. 15 lakhs 30% 25%
Above Rs. 15 Lakh 30% 30%

 

Super Senior Citizen Group-Age more than 80 years

Income range per annum Tax Rate FY 2019-20 New Slab for FY 2020-21, AY 2021-22
Rs. 2.5 lakhs NIL NIL
Up to Rs. 5 lakhs  NIL NIL
Rs. 5 lakhs - Rs. 7.5 lakhs 20% 10%
Rs. 7.5 lakhs- Rs. 10 lakhs 20% 15%
Rs. 10 lakhs- Rs. 12.5 lakhs 30% 20%
Rs. 12.5 lakhs - Rs. 15 lakhs 30% 25%
Above Rs. 15 lakhs 30% 30%

Income Tax Calculation

The online tax calculator will do your Income-tax computation based on the tax slab. The taxable income is calculated after making the applicable deductions, other taxes that are already paid (Advance Tax), and tax deducted at source (TDS).

Tax Rates and Tax Computation
Income Tax Rate
Less than and equal to Rs. 2,50,000 NIL
Rs. 2,50,000- Rs. 5,00,000 5%
Rs. 5,00,00 - Rs. 10,00,000 Rs. 12,500 plus 20% of Income above Rs. 5 lakhs
Above Rs. 10,00,000 Rs. 1,12,500 plus 30% of Income above Rs 10 lakhs
Senior Citizen Income Tax Rate
Less than or equal to Rs.3,00,000 Nil.
Rs. 3,00,000- Rs. 5,00,000 5%
Rs. 5,00,000-Rs. 10,00,000 Rs.10,000 plus 20% of Income above Rs. 5lakhs.
Above Rs. 10,00,000 Rs. 1,10,000 plus 30% of Income above Rs 10 lakhs.
Super Senior Citizen Income Tax Rate
Less than or equal to Rs. 5,00,000 NIL
Rs. 5,00,000-Rs. 10,00,000 20%
Above Rs. 10,00,000 Rs. 1,00,000 + 30% of Income exceeding of Rs 10 lakhs

A full tax rebate for income below Rs. 5 lakhs under Section 87A is proposed as per guidelines of the Union Budget 2019-20.

Applicable Deductions under Sec 80C of Income Tax Act

The following payments or investments can be quoted for deductions under Sec 80 C of the Indian Income Tax Act, 1961. The online calculator options provide boxes for various online tax deductions.

  • Term Insurance
  • Unit Linked Insurance policies or ULIPs
  • Protection/Endowment Insurance policies
  • 5 years fixed deposit (FD|)
  • Repayment of Housing Loan
  • Education Loan repayment
  • Public provident fund
  • Equity Linked Saving Scheme

How to Calculate Income Tax?

Income Tax Calculation your Salary: An Example

Let us try to understand how to calculate Income Tax on your salary. 

Suppose an employee A with a company earns a basic salary of Rs 37,500 per month.

The salary for A in the financial year 2019-2020, will be Rs 37,500 X 12= Rs 450,000. 

Let us now consider the various components of the salary of A.

Suppose A’s salary also includes House Rent Allowance (HRA) of Rs 20,000 per month.

HRA =Rs 2.4 Lakh per year.

A stays in Hyderabad and pays rent of Rs 15,000 per month.

Total Rent = 15,000 X 12= Rs 1.80 Lakh per year.

There is also a special allowance or some incentive component of Rs 10,000 per month.

Special Allowance= Rs 10,000 X 12= Rs 1.2 Lakh per year.

A also has an EPF component that is deducted from his salary per month, which is 12% of his basic salary every month,

EPF =Rs (37,500 X 0.12) = Rs 4,500 per month, or 4500 X 12=Rs 54,000 p.a.

Taxable Income from Salary

As per the HRA computation method, we have to take the lowest of these 3 values for tax purposes:

  • 50% of annual basic salary = Rs (4.5 Lakh X 0.5) = Rs 2.25 Lakh
  • HRA received on an annual basis = Rs 2.4 Lakh
  • Rent that is paid in excess of 10% of annual basic salary = Rs (1.8 Lakh - (0.1 X 4.5 Lakh)) = Rs 1.35 Lakh

Therefore, the Total taxable HRA = Rs 2.4 Lakh – Rs 1.35 Lakh = Rs 1.05 Lakh for A. 

Now, Gross Income from Salary= Basic + HRA +Special Allowance

So, the Gross Income from Salary= Rs 4.5 Lakh + Rs 2.4 Lakh + Rs 1.2 Lakh = 8.10 Lakh

Total exemptions= Taxable HRA + Standard Deduction, I.e., Rs 1.35 Lakh + Rs 50,000

Now, Taxable Income from Salary= Gross Income from salary- Total taxable amount.

I.e. Total taxable amount= Rs 50, 000

(In the Interim Budget of 2019, Standard Deduction or exemption became Rs 50,000)

Taxable Income from Salary= Rs 4.5 Lakh + Rs 1.05 Lakh + Rs 1.02 Lakh – Rs 50,000= Rs 6.25 Lakh

Now, let A invest in Public Provident Fund i.e., PPF and Equity Linked Savings Scheme (ELSS) during the financial year 2019-20. These investments are for Rs 50,000 for PPF and Rs 15,000 towards ELSS. 

Total deductions= Rs 50,000 +Rs s15,000+ EPF contribution deducted by employer i.e. Rs 54,000 (Maximum limit is Rs 1.5 Lakh)

I.e. Rs 50,000 + Rs 15,000+ Rs 54,000= Rs 119,000

Now Gross Taxable Income = Taxable Income from Salary –Total deductions.

In A’s case, this amounts to= Rs 6.25 Lakh – Rs 1.19 Lakh = Rs 5.06 Lakh

Features and Benefits of Income Tax Calculator

  • Precise fields to enter all income, investment, and tax-related information
  • Online income tax calculator options show explicit fields to enter separate 80C, 80CCD,80D, 80E,80TTA/TTB, and HRA exemptions to reduce computation errors while entering total investments
  • You can get auto-calculated net income and tax generated on it
  • Along with tax details, some calculators also provide figures for the additional amount you could save under investments under Sec 80C/ 80D of the Indian Income Tax Act
  • The tool provides not only numerical tax figures but also a summary that gives you complete details about the Income-tax calculations.
  • The figures can be used to analyse your taxable income and what can be done to reduce tax deductions, wherever possible
  • It gives a quick and basic income tax computation for the Financial Year. For advanced tax calculations, you need to refer to your tax consultants

FAQ's

  • Q: Is filing for income tax returns mandatory?

    Ans: If your annual income is below the exemption limit, then you need not file income tax returns. However, if you have an income that falls below the taxable limit, but has a PAN (Permanent Account Number) card; it is better to file your ITR with a NIL or zero return. Individuals who have income less than Rs 2.5 Lakh and still want to claim an income tax refund can only do so by filing an ITR. 

    Otherwise, it is mandatory to file income tax returns. Even if you are an Indian resident with investments or property outside India, you need to file income tax returns. This is applicable even if your overall income falls below the prescribed tax limit. You will also have to file your tax returns if you want to claim refunds on any advance taxes that you may have paid in earlier.

  • Q: When do I have to pay taxes on my income?

    Ans: The taxes on the income of an individual can be finalized and paid only on the completion of the previous year. However, our Income-tax Act provides the option to pay taxes in advance during the earning year or before the completion of the previous year. It is also known as Pay as you earn a concept. This is to enable a regular flow of funds and for a straightforward process of collection of taxes.
  • Q: What is the maximum limit for non-taxable income?

    Ans: Income up to Rs 2.5 Lakh is exempt from taxes. Under Section 87A of the Indian Income Tax Act, an individual gets a full rebate on tax if his income is less than Rs 5 Lakh.
  • Q: Does the income tax calculator provide a TDS feature?

    Ans: No, the income tax calculator does not provide this feature. It does not include the Tax Deducted at Source or the TDS. It just calculates your tax liability for the assessment year.
  • Q: Is there any difference between exemption and deductions while computing taxes?

    Ans: An Income tax exemption is provided on specific sources of income and not on the total income. On the other hand, income tax deductions can be claimed on the total gross income. You can claim Income tax deductions on certain specified investments and expenditures. This is the amount of money that is reduced from your total taxable income. Sections 80C to Sec 80U of the Income Tax Act, 1961, deal with the various deductions available to taxpayers.
Written By: Paisawiki - Updated: 18 November 2020