Income Tax is a vital factor of financial planning that keeps track of your tax liabilities. With innovations in technology, the procedure of tax calculation has become user-friendly and effortless. There are numerous income tax calculator tools you can use. Income tax calculators use your taxable income, tax exemptions and deductions to calculate your income tax liability. With the help of the guide, you will know what an income tax calculator is, how to calculate your tax with the help of the income tax calculator India, and a few tools you can use to calculate income tax.
The other factors that an income tax calculator considers are as follows:
- Housing Loan Payments
The income tax calculator India, available online, is free and user-friendly. It gives results for free swiftly and without any errors. When the union budget for a particular year is announced, the income tax calculator tool aids in analysing the taxes depending on your income. You can pay income tax through TDS, disbursing your monthly salary or paying through the official website that the Central Board of Direct Taxes manages.
Significant Terms in Income Tax Calculation
A few significant terms related to income tax calculation are as follows:
- Year of Assessment- The year of assessment is defined as the year when your income for a particular fiscal year is analysed for the upcoming fiscal year.
- Financial Year- A financial year is the time between 1st April of the existing year to 31st March of the upcoming year and when you gather your documents and submit your proof of investment.
- Deduction- Deduction is the reduction of your overall taxable income depending on section 80C.
- Exemption- Exemption is the certain amount which is excluded from the overall aggregate income before you calculate income tax.
Ways You Can Adopt to Use an Income Tax Calculator
The ways you can adopt to calculate income tax with the help of the income tax calculator are as follows:
- Select the year of assessment for which you wish to calculate your income tax.
- Select your age because income tax differs from person to person depending on your age.
- Tap on the Go the Next Step option.
- If you want to know about your tax liability, it will help you if you type your taxable salary in the space provided.
- In addition to your taxable salary, you will have to type your interest income, rental income, the interest rate that you pay on your home loan for rent, and the interest that you pay on your home loan for your house.
- Tap on the Go to the Next Step option.
- If you want to calculate your tax according to the old tax regime, it will help you if you type in your investments related to saving tax under sections 80C, 80D, 80G, and 80TTA.
- You must tap on the calculate option to know your tax liability. Under both old and new tax regimes, you can differentiate between your pre-budget and post-budget tax liability.
- You can type zero for a field that you think is not applicable to you.
How Can You Calculate Income Tax?
You can calculate income tax depending on your taxable income that applies to the tax slab. You can derive your taxable income if you add your income from your income sources to obtain your aggregate total income. You can subtract your aggregate total income from the tax deductions and exemptions that you can avail of. Taxes that you pay in advance will be taken into account while calculating income tax.
How Can You Calculate the Overall Income Tax Liability?
You can estimate the overall tax expenses with the help of an income tax calculator India online. Such income tax calculator tools consider a few factors to mirror your tax liability after a fiscal year comes to an end:
- Net salary income or profits
- Income earned through other income sources like rents, investments, etc
- Applied tax exemptions
Mentioning data related to the factors mentioned above will show your overall tax liability. In any situation, if your paid taxes go beyond your overall liability, the Government compensates the disparity within a few days of filing for the reimbursement.
If you file your return after your due date ends, you are bound to pay interest and penalties under sections 234A and 234F, respectively. Therefore, it would be best not to forget the due date of the ITR filing. Nonetheless, it will help you if you remember that due date ranges are based on the taxpayers’ category. For example, you as a salaried working individual, should complete your ITR filing procedure within 31st July of each financial year.
What are Income Tax Slabs?
Income Tax in India works depending on a slab system. The income tax is levied based on the category of taxpayers individually. Income Tax Slabs mean the contracting rates charged on taxes according to your income range. In simple words, the higher your income is, the more tax you pay. During the time of the budget announcement session, there’s a revision in the income tax slabs. The income tax slab rates are separated for different taxpayers’ categories. The three different categories of taxpayers in India are as follows:
- People less than sixty years
- Sixty to eighty years Indian citizens
- Indian citizens above the age of eighty years.
Searching for ways to acquire more knowledge about finance is a good decision you can take. The calculation of income tax with the help of the income tax calculator is a time-consuming and complicated procedure. There are several tools and mobile applications available online which help you to calculate income tax. The income tax calculator India aids you in estimating your tax liability and planning your investments to save tax according to your suitability. Income tax calculators give a correct estimate of your owed taxes depending on your taxable income, tax exemptions, deductions, laws, and rates for a specific fiscal year. You can opt for any income tax calculator India.