Here’s How You Can Calculate Income Tax on Your Salary
Posted: Jan 10, 2019
First things first!
The income tax is the sum of money that you need to pay in the form of the tax to the Government as per your tax slab that you fall under depending on your salary. To calculate an exact amount that is payable as the tax, you need to figure out your taxable income.
Once you are aware of such a figure, the final tax can be computed by applying the appropriate tax rates in action. Then, the deducting taxes already paid via the TDS/TCS or Advance tax due amount is arrived at.
Income tax slabs that you may fall under
Yearly income up to Rs.2.5 lakh – No income tax payable
Yearly income between Rs.2.5 lakh to Rs.5 lakh – 5% income tax
Annual income between Rs.5 lakh to Rs.10 lakh – 20% income tax
Annual income above Rs.10 lakh – 30% income tax
Steps to easily calculate income tax on your salary/income
The finally taxable income from your salary is computed after applying all valid deductions. These deductions are in the form of LTA exemption, HRA, interest on home loan. These are adjusted from your total income, which is the income from other sources + the gross salary.
After this is computed, the income tax gets calculated as per the slab under which your taxable earnings fall under + 3% cess.
Let’s provide you with an example to help you know more!
Example: If your taxable income falls under the tax slab of Rs.5 lakh to Rs.10 lakh, then the figure till Rs.2.5 lakh will be free from any income tax. From Rs.2.5 lakh to Rs.5 lakh, it will be taxed at 5%. And all the amounts between Rs.5 lakh and Rs.10 lakh will invite 20% income tax along with a cess of 3%.
Anyone who does not know how to calculate income tax should know that he/she can always use the online tool known as the income tax calculator.
What is the income tax calculator?
Technological advancements are happening in every field, and the finance industry is no exception. As a result, the emergence of the online tool in the form of the online income tax calculator is a great step.
Many finance websites, portals and apps are nowadays offering the online income tax calculator facility for all. Anyone willing to calculate his/her taxable income can use the income tax calculator India facility free of cost.
How to use the income tax calculator?
An online income tax calculator is a handy tool to use that doesn’t require you to possess any prior technical skills.
Once you are on the income tax calculator, you need to follow some simple steps to calculate the income tax such as:
Select the assessment year that you want to calculate your taxes for
Choose your age as per your PAN Card
Enter your email address
Enter your taxable salary (after deducting Rs.40,000 and other allowances from the salary)
Enter the TDS deducted from the salary
Provide any income that you received as interest
Feed TDS deducted other than the salary
Enter interest paid on a home loan for self-occupied houses
Provide the rental income received only for rental houses
Feed paid interest on the loan
Enter all applicable deductions such as basic, interest from deposits, charity donations, mediclaim premium and interest paid on an educational loan
Prafulla Mishra is an experienced real estate advisor who is well known for his ability to foretell the market trends as well as for his real estate astuteness. He has worked extensively in the realty sector and has been dealing with the entire range