Income Tax Calculator
What is an Income Tax Calculator?
The Income Tax Calculator is a simple tool that can calculate your income tax. It considers your income, deductions and exemptions to calculate the amount of tax you owe.
You can use it to estimate your taxes for the current year or previous years.
It is important to note that the calculator is only a tool and is not a substitute for professional tax advice.
If you have questions about your taxes, you should always speak to a qualified tax advisor.
How to use the Income Tax Calculator?
Pick a tax regime: There are two tax regimes in India, the old regime and the new regime. The new regime has lower tax rates but fewer deductions and exemptions. The older regime has higher tax rates but more deductions and exemptions. Choose the regime that would be beneficial for you to calculate your taxes.
Enter your annual income: This is your total income from all sources before deductions. Include your salary, wages, tips, commissions, interest, dividends and other forms of income.
Enter your deductions: This includes any expenses you can claim as deductions on your tax return. Common deductions include specified investments & payments, Insurance policies, charitable donations, office expenses and professional dues.
Enter your exemptions: This includes any personal exemptions you may claim on your tax return. These vary depending on your filing status and dependents.
Click "Calculate": The calculator will automatically calculate your income tax based on the information you have provided.
How Income Tax Is Calculated for the Salaried
The taxable income of the salaried includes salary, allowances (excluding exempt allowances), perquisites, profit in lieu of salary, and commission received from the employer. The first step is to calculate the gross total income from all these sources.
The second step is to reduce this figure by certain deductions that are available under Chapter VI-A of the Income Tax Act. These deductions include investments in specified saving schemes, life insurance premiums, and repayment of the housing loan principal, among others. The resulting figure is the taxable income.
The third and final step is to calculate tax on this taxable income using the applicable tax rates.
Once the tax on the taxable income has been calculated, any applicable cess and surcharge must be added to this figure. Cess is currently levied at 4% while surcharge is levied at
- 10% for incomes between Rs 50 lakh and Rs 1 crore,
- 15% for incomes between Rs 1 crore & Rs 2 crores,
- 25% for incomes between Rs 2 crore & Rs 5 crores, and
- 37% for incomes above Rs. 5 crores.
The ultimate figure is the income tax liability of the salaried individual.
Income Tax Rates for FY 2021-22 (AY 2022-23)
The following income tax rates apply for the financial year 2021-22 (the assessment year 2022-23).
- Income up to Rs 2.5 lakh: NIL
- Rs 2.5 lakh to Rs 5 lakh: 5%
- Rs 5 lakh to Rs 10 lakh: 20%
- Above Rs 10 lakh: 30%
- Income up to Rs 5 lakh: NIL
- Rs 5 lakh to Rs 7.5 lakh: 10%
- Rs 7.5 lakh to Rs 10 lakh: 15%
- Rs 10 lakh to Rs 12.5 lakh: 20%
- Rs 12.5 lakh to Rs 15 lakh: 25%
Above Rs 15 lakh: 30%
Cesses and Surcharges
Besides the income tax rates, a cess of 4% and a surcharge as discussed above would be levied accordingly.
Mr Sharma is a salaried individual with a gross total income of Rs 12 lakh for the financial year 2021-22. He may claim deductions under Chapter VI-A of Rs 1.5 lakh. His taxable income is therefore Rs 10.5 lakh.
Under the old regime, we would calculate his tax liability as follows:
Income up to Rs 2.5 lakh: NIL
Rs 2.5 lakh to Rs 5 lakh: 5% of Rs 2.5 lakh = Rs 12,500
Rs 5 lakh to Rs 10 lakh: 20% of Rs 5 lakh = Rs 1,00,000
Above Rs 10 lakh: 30% of Rs 0.5 lakh = Rs 15,000
Total tax liability (excluding surcharge & cesses) Rs 1,27,500
Under the new regime, we would calculate his tax liability as follows:
Income up to Rs 5 lakh: NIL
Rs 5 lakh to Rs 7.5 lakh: 10% of Rs 2.5 lakh = Rs 25,000
Rs 7.5 lakh to Rs 10 lakh: 15% of Rs 2.5 lakh = Rs 37,500
Above Rs 10 lakh: 20% of Rs 0.5 lakh = Rs 10,000
Total tax liability (excluding surcharge & cesses) Rs 72,500
As seen in the example above, Mr Sharma would save a tax of Rs 55,000 by opting for the new regime.
If you are looking to do e filing of income tax return, we can help you with that. eAuditor Office has Income Tax professionals who are proficient at efiling income tax return from individuals to huge corporations.
Author : Nivetha
Date : 12-Jul-2022