The months of March and July can be a taxing time for people, in more ways than one. You have to ensure that you have paid all the taxes for the year, and remember to file your returns on time. And then you will have to remember what you have earned, what you have spent, what deductions can you claim and so on. To relieve some of the headaches, you will need an income tax calculator.
Of course, if your financial affairs are on the messier side, like that of most people, you might want to seek the help of a chartered account. But even if you do that, it’s not a bad idea to use an income tax calculator to find out how much you owe; you don’t want any nasty surprises at the end of the financial year! You can use our online income tax calculator to find out how much you owe well in advance so that you aren’t caught unawares at tax paying time, or return filing time.
Our income tax India calculator will help you find out how much you need to pay.
The first thing you need to know is before using the online income tax calculator is your taxable income. This is your income after all deductions. If you are running a business, you will obviously have to deduct allowable deductions while using the online income tax calculator.
Then there are certain deductions available for taxpayers under various sections. For example, you can get a deduction of up to Rs 1.5 lakh from your taxable income under Section 80C of the Income Tax Act by investing in tax saving instruments like Public Provident Fund (PPF), Employees Provident Fund (EPF), equity linked savings schemes (ELSS), life insurance etc. You can also get deductions of up to Rs 25,000 for medical insurance premiums for yourself and Rs 30,000 for your parents. You can also get deduction of up to Rs 10,000 on interest earned on a savings account.
Then there are other deductions too, like donations to select charities and interest on educational loans, which you will have to take into account while using the income tax calculator.
Salaried people are allowed to claim certain exemptions from their income. For example, you can claim a certain amount of exemption from house rent allowance (HRA), especially if you pay rent. Transport allowance, LTA and medical bills are also allowed some exemptions so make sure you account for all these while using the income tax India calculator.
As you are aware, tax rates vary according to the income tax slab you are in, so when you use your income tax calculator, you need to consider this.
|Tax slab||Income tax payable*|
|Up to Rs 2.5 lakh||Nil|
|Between Rs 2.5 lakh and Rs 5 lakh||5 per cent|
|Between Rs 5 lakh and Rs 10 lakh||20 per cent|
|Above Rs 10 lakh||30 per cent|
If you’re straddling any two of these categories, make sure you invest enough so that you fall into the lower category. For example, if your income is Rs 11 lakh per annum, you will be in the highest tax bracket and have to pay a tax rate of 30 per cent. By investing Rs 1.5 lakh in PPF or ELSS, you will be able to reduce your taxable income to Rs 9.5 lakh. So instead of paying Rs 1.48 lakh in tax, you will pay only Rs 1.06 lakh. That means you save Rs 42,000 in tax, and invest in something that will earn you an income.
When you use the income tax calculator, remember to include income from all sources like:
House property, like rent
Other sources – interest income etc
Don’t forget to include all these. Salaried taxpayers sometimes forget to include income from other sources while filing returns, assuming that since their company deducts income tax from salaries, there’s no need to bother about paying more tax, or even to file returns.
But remember that the interest you have earned from your fixed deposits are also liable to tax. Generally banks deduct 10 per cent tax on interest earned on fixed deposits, but depending on your tax slab, you may have to pay more tax, or claim a deduction if an excess amount has been paid.
Another thing to note while using the income tax calculator is that you have to also consider taxes already paid through tax deducted at source (TDS). You can access your annual tax statement through your online bank account to find out how much tax you have paid during the financial year. If the tax that has been paid is more than the rate in your tax slab, you can claim a deduction while filing income tax returns.