Income Tax Calculator
- 1Basic Details
- 2Income Details
- 3Deductions
Assessment year (AY)
Age Category
What is an Income Tax Calculator?
An Income Tax Calculator is an online tool designed to help you estimate your tax liabilities based on your annual income, deductions, and exemptions. m.Stock’s Income Tax calculator, in particular, simplifies the process of determining how much tax you owe to the government and helps you plan your finances more effectively. It takes into account various factors such as salary, rental income, interest income, and other sources of income as well. Additionally, it considers deductions under different sections like 80C, 80D, and others to provide an accurate calculation of taxable income and the tax due.
Using an Income Tax Calculator can save you time and reduce errors compared to manual calculations. It is especially useful for those who have multiple income sources or complex tax situations. By entering your financial details into the calculator, you can quickly understand your tax obligations, avoid surprises during tax filing season, and plan your investments better to optimise tax savings. The calculator is often updated with the latest tax laws and slabs, ensuring that your calculations are based on current regulations.
Steps to Use Income Tax Calculator
Using m.Stock’s Income Tax Calculator is pretty straightforward and involves a few simple steps:
Gather Financial Information
Collect all relevant financial documents, including salary slips, rental income records, bank statements for interest income, and details of any other income sources.
Enter Personal Information
Input basic details like your age and residential status, as these factors can influence tax calculations due to different slabs and exemptions for senior citizens and other categories.
Choose Your Tax Regime
Indian taxpayers are allowed to choose between the old and new tax regimes, with the new being the default one.
Input Income Details
Enter your total income from various sources, such as salary, business income, rental income, and any other earnings.
Include Deductions
Specify the deductions you are eligible for under sections like 80C, 80D, 80G, etc. This includes investments in life insurance, health insurance premiums, donations to charitable organisations, and more. Remember, most of these deductions will not be applicable if you choose the new tax regime
Calculate Taxable Income
The calculator will automatically deduct the entered deductions from your total income to determine your taxable income.
Compute Tax Liability
Based on the taxable income, the calculator applies the appropriate tax slabs and rates to compute your total tax liability.
Review and Plan
Review the calculated tax liability and use this information to plan your tax payments and investments more effectively.
By following these steps, you can easily estimate your income tax liability and make informed financial decisions. Apart from getting a precise calculation of your tax liabilities and saving time in the process, the ITR calculator helps in effective tax planning and budgeting by providing a clear picture of tax obligations. Moreover, it also allows for immediate recalculations as you update income or deduction details, providing instant feedback.
Understand the Income Tax Slabs
Income tax slabs are predefined ranges of income that are taxed at specific rates. These slabs are set by the government and can vary based on the individual's age and residential status. For instance, different tax rates apply to individuals below 60 years, senior citizens (60-79 years), and super senior citizens (80 years and above). The government periodically reviews and updates these slabs to reflect economic conditions and policy changes, so staying informed about current tax slabs is essential for effective financial management.
The slabs ensure a progressive taxation system wherein people who are earning a higher income pay a higher percentage of tax compared to those who earn less than them. For the current financial year, income tax slabs are structured into different ranges, such as:
Income Tax Slabs: Old Tax Regime
| Income Range | Income Tax Slabs (people below 60 Years of age) | Income Tax Slab (Senior Citizens) | Income Tax Slab (Super Senior Citizens) |
|---|---|---|---|
| Up to ₹2.5 Lakhs | Nil | Nil | Nil |
| ₹2.5 Lakhs – ₹5 Lakhs | 5% | 5% | Nil |
| ₹5 Lakhs – ₹10 Lakhs | 20% | 20% | 20% |
| Above ₹10 Lakhs | 30% | 30% | 30% |
Income Tax Slabs: New Tax Regime
| Income Range | Income Tax Slabs(same for all age groups) |
|---|---|
| Up to ₹ 3 Lakhs | Nil |
| ₹3 Lakhs – ₹6 Lakhs | 5% |
| ₹6 Lakhs – ₹9 Lakhs | 10% |
| ₹9 Lakhs – ₹12 Lakhs | 15% |
| ₹12 Lakhs – ₹15 Lakhs | 20% |
| Above ₹15 Lakhs | 30% |
Understanding these slabs is crucial for accurate tax planning. Knowing the applicable slab helps anticipate your tax liabilities and explore ways to optimise your taxable income through investments and deductions.
How to Calculate the Total Income Tax Liability?
Calculating your total income tax liability involves several steps, integrating all sources of income and applicable deductions. Here’s a step-by-step guide:
- Determine Gross Income:Combine all sources of income, including salary, business profits, rental income, capital gains, and interest earnings.
- Deduct Exemptions:Subtract any income exempt from tax, such as agricultural income or certain allowances.
- Apply Deductions:Deduct eligible investments and expenses under sections like 80C , (e.g., life insurance premiums,ELSS) 80D (health insurance premiums), and others. This will give you your net taxable income.
- Use Tax Slabs:Apply the current tax slabs to your net taxable income. Calculate the tax for each slab segment. For example, if the first slab is tax-free up to a certain amount, the next portion is taxed at 5%, and so on.
- Add Surcharges and Cess:Include any applicable surcharges for high-income earners and the health and education cess, typically 4% of the total tax liability.
- Compute Total Tax Liability:Sum up the tax amounts from each slab segment, including surcharges and cess, to get your total income tax liability.
By following these steps, you can accurately estimate how much tax you owe for the financial year. Use m.Stock’s Income Tax Calculator to automate the process and get accurate estimations quickly.
Exemptions on Total Income Tax
Exemptions on total income tax help reduce your taxable income, thereby lowering your overall tax liability. These exemptions are available under various sections of the Income Tax Act and cover a wide range of expenses and investments. Furthermore, a flat ‘standard’ deduction is available to salaried employees, which is periodically updated by the government.
- Section 80C: Allows deductions up to ₹1.5 lakh for investments in life insurance, PPF, NSC, ELSS, and principal repayment of home loans.
- Section 80D:Provides deductions for health insurance premiums—up to ₹25,000 for individuals and ₹50,000 for senior citizens.
- Section 80E: Allows deduction of interest on education loans without any upper limit.
- House Rent Allowance (HRA):Exemptions are available if you live in rented accommodation, subject to certain conditions and limits. Different HRA ranges are implemented for Tier-2 cities versus metro cities.
- Leave Travel Allowance (LTA):Leave Travel Allowance (LTA) is a benefit provided by employers to employees to cover travel expenses incurred during vacations within India. It is intended to promote work-life balance and employee well-being, and is tax-exempt under certain conditions.
- Section 24(b):Deduction of interest on home loan repayment, up to ₹2 lakh for self-occupied properties.
- Section 80G:Provides deductions for donations to specified charitable institutions and funds.
By understanding and utilising these exemptions, you can significantly reduce your taxable income. It is crucial to maintain proper documentation and adhere to the stipulated conditions to claim these exemptions successfully. Remember, these exemptions are applicable only under the Old Tax Regime.