Income Tax Calculator

Income Tax Calculator

The Income Tax Calculator is an indispensable online tool that helps taxpayers estimate their tax liability based on the latest income tax changes proposed in the Union Budget.

With the introduction of the new tax regime, the calculator has been revamped to reflect the revised tax slabs, deductions, and exemptions, making it an essential resource for individuals navigating the intricacies of the Indian tax system.

Income Tax Calculator: Step-by-Step Guide

Step 1: Access the e-Filing portal’s homepage.

Income Tax Calculator

Step 2: Navigate to the Quick Links section and select Income and Tax Calculator. (The image will show the location of the calculator link once available).

You’ll be redirected to the Income and Tax Calculator page, which features two tabs: Basic Calculator and Advanced Calculator. By default, the Basic Calculator tab is active.

Income Tax Calculator

Step 3a: In the Basic Calculator tab, provide the necessary details, such as the Assessment Year (AY), taxpayer category, age, residential status, total annual income, and total deductions. The tax calculation based on your inputs will be displayed in the Tax Summary section.

Income Tax Calculator

Note: Click View Comparison to obtain a detailed comparison of the tax calculations under the old and new tax regimes.

Income Tax Calculator

 

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Step 3b: Switch to the Advanced Calculator tab and enter the following information:

  • Preferred tax regime
  • Assessment Year (AY)
  • Taxpayer category
  • Age
  • Residential status
  • Due date for filing the return
  • Actual date of submission

Under Income and Tax Calculation Details, input the relevant figures for:

  • Income from Salaries
  • Income from House Property
  • Income from Capital Gains
  • Income from Business or Profession
  • Income from Other Sources

Under Deduction Details, specify the applicable deductions, including but not limited to:

  • Public Provident Fund (PPF)
  • Life Insurance Premium (LIC)
  • Housing Loan
  • National Pension Scheme (NPS)
  • Mediclaim
  • Education Loan

In the Taxable Income section, enter or modify the TDS/TCS details for which you have supporting evidence.

New

The total tax payable, along with any interest, will be displayed at the bottom of the page.

Related Article:

Understanding the New Tax Regime

The new tax regime aims to simplify the income tax structure by offering lower tax rates in exchange for forgoing certain exemptions and deductions.

This regime is optional, and taxpayers can choose to continue with the old tax regime if it is more beneficial for their specific circumstances.

Under the new tax regime, individuals are required to forgo the following exemptions and deductions:

  • House Rent Allowance (HRA)
  • Leave Travel Allowance (LTA)
  • Standard Deduction
  • Interest on home loan for self-occupied property
  • Deductions under Chapter VI-A (like 80C for investments, 80D for medical insurance, 80G for donations, etc.)

However, a few allowances are still permitted, including:

  • Transport Allowance for differently-abled employees
  • Conveyance Allowance for job-related travel
  • Allowance for travel on tour or transfer
  • Daily Allowance for expenses incurred during official duties

New Income Tax Slabs

The new tax slabs and rates under this regime are as follows:

Income Slab Tax Rate
Up to ₹3 lakh Nil
₹3 lakh – ₹6 lakh 5%
₹6 lakh – ₹9 lakh 10%
₹9 lakh – ₹12 lakh 15%
₹12 lakh – ₹15 lakh 20%
Above ₹15 lakh 30%

How to Calculate Income Tax: See With Example

Income from salary comprises various components, including Basic salary, House Rent Allowance (HRA), Special Allowance, Transport Allowance, and any other allowances.

Certain elements of your salary are exempt from tax, such as telephone bill reimbursements and leave travel allowances. If you receive HRA and live on rent, you can claim exemption on HRA using an HRA Calculator.

Additionally, a standard deduction of Rs. 40,000 was introduced in the Budget 2018, which was subsequently increased to Rs. 50,000 in the Budget 2019 and further extended in the Budget 2023. It’s important to note that the standard deduction of Rs. 50,000 is available under the new tax regime as well.

However, if you opt for the new tax regime, you will not be eligible for certain exemptions, such as HRA, leave travel allowance, and the standard deduction.

Let’s understand the income tax calculation under the current tax slabs and the new tax slabs (optional) using Parveen’s example:

Parveen receives a Basic Salary of Rs. 1,00,000 per month, HRA of Rs. 50,000, Special Allowance of Rs. 21,000 per month, and LTA of Rs. 20,000 annually. Parveen pays a rent of Rs. 40,000 and lives in Delhi.

Nature Amount Exemption/Deduction Taxable (Old Regime) Taxable (New Regime)
Basic Salary 12,00,000 12,00,000 12,00,000
HRA 6,00,000 3,60,000 2,40,000 6,00,000
Special Allowance 2,52,000 2,52,000 2,52,000
LTA 20,000 12,000 (bills submitted) 8,000 20,000
Standard Deduction 50,000 50,000 50,000
Gross Total Income from Salary 16,50,000 20,22,000

This is how income tax has been calculated for Neha under the new tax regime

Up to Rs 3,00,000 Exempt from tax 0
Rs 3,00,000 to Rs 6,00,000 5% (5% of Rs 6,00,000 less Rs 3,00,000) 15,000
Rs 6,00,000 to Rs 9,00,000 10% (10% of Rs 9,00,000 less Rs 6,00,000) 30,000
Rs 9,00,000 to Rs 12,00,000 15% (15% of Rs 12,00,000 less Rs 9,00,000) 45,000
Rs 12,00,000 to Rs 15,00,000 20% (20% of Rs 15,00,000 less Rs 12,00,000) 60,000
More than Rs Rs 15,00,000 30% (30% of Rs 20,42,000 less Rs 15,00,000) 1,62,600
Cess 4% of total tax (4% of Rs 15,000 + Rs 30,000+ Rs 45,000 + Rs 60,000 + Rs 1,62,600) 12,504
Total Income Tax Rs 15,000 + Rs 30,000+ Rs 45,000 + Rs 60,000 + Rs 1,62,600 + Rs 12,504 Rs 3,25,104

Factors to Consider When Choosing the New Tax Regime

While the new tax regime offers lower tax rates, it comes with the trade-off of forgoing several exemptions and deductions that could potentially reduce your overall tax burden. Here are some crucial factors to consider when deciding whether to opt for the new tax regime:

  • Investment and Savings: If you have substantial investments or savings that qualify for deductions under sections like 80C (for investments in PPF, ELSS, etc.), 80D (for medical insurance premiums), and 80G (for donations), the old regime may be more beneficial.
  • Home Loan Interest: If you have a home loan for a self-occupied property, the interest paid on the loan is not deductible under the new regime, which could significantly increase your tax liability.
  • Rental Income: If you have rental income from properties, the interest paid on the home loan for the rented property is not deductible under the new regime, potentially increasing your taxable income.
  • Income Level: Generally, individuals with lower income levels may benefit more from the new regime, as the lower tax rates could outweigh the loss of deductions. However, for those with higher incomes, the potential savings from deductions under the old regime may be more significant.

It’s essential to carefully evaluate your individual circumstances, income sources, investments, and deductions to determine which tax regime is more advantageous for you. The Income Tax Calculator can be a valuable tool in this decision-making process, as it allows you to compare your tax liability under both regimes.

Conclusion

The Income Tax Calculator is a powerful resource that simplifies the complex task of calculating your tax liability under the new tax regime. By providing a user-friendly interface and incorporating the latest tax regulations, the calculator empowers taxpayers to make informed decisions and plan their finances more effectively.

As the Indian tax system continues to evolve, the Income Tax Calculator will remain a reliable companion, ensuring that individuals can navigate the intricacies of the tax landscape with ease and confidence. Embrace this tool as your guide to understanding the implications of the new tax regime and make the choice that best aligns with your financial goals and aspirations.

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