written by Sourish | April 19, 2021

Income tax Calculator - Calculate Your Taxes For FY 2021-22 Use Tax Calculator Online

Individuals must pay their taxes on any income or profit earned. The income tax calculator helps taxpayers to find their taxable income and total tax amount. It takes into account the deductions and exemptions that can be used under Sections 80C,80D, etc. The calculator finds your tax liability based on your annual income.

Income Tax Calculator

An income-tax calculator is an online facility that helps in the calculation of taxes based on a person's earnings and gains. Individuals with taxable profits must pay a percentage of their total annual income in taxes. Income tax can be collected in two ways: at the time of disbursement of a monthly salary, as tax deducted at source, or through the income tax returns website. 

Now let's get to know the topic in a detailed manner. 

Also Read: GST Portal – India’s Online Tax Office 

What Are Income Tax Slabs and How Do I Understand Them?

The Indian income tax system is based on a slab system, and individual taxpayers are taxed accordingly. The term "slab" refers to the varying tax rates applicable to various income levels. To put it another way, the higher your salary, the higher the tax you would pay. Every year, during the budget presentation, these income tax slabs are updated. Again, these slab rates are broken down into various groups for different types of taxpayers. 

Various Heads of Income under income tax act 1961 

Wage/Pension Income: This includes basic salary, taxable, search and earnings instead of wages, as well as pensions received by the person who retired himself. Wage and pension incomes are included in the taxable income computation.

Business/Professional Income: This includes real and presumptive business income and professional income which the individuals make as and are added to taxable income following the adjustment of permitted deductions.

Other Revenues: This includes income, including taxable income such as savings accounts interest, fixed deposits (FD), family pensions, etc.

Lottery, Betting, Race Horse Etc. Income: Income of this type is included in total income is put under this category.

Capital Gain: Capital gains arise when gold, house, stocks, securities, mutual fund, etc., are sold. Capital gains on the sale of such assets are categorized as short-term and long-term capital gains, depending on the type of capital assets and the holding period.

House Property Income: An assessor may own one or more house properties. Income from home property includes self occupation, rental or even vacation of these house properties. The rules in this heading describe the manner in which rents from one and more properties for taxable income are to be dealt with.

Why Is The Calculation Of Your Income Tax Important?

The Income Tax Calculator assists taxpayers in arranging, planning and legally reducing their financial perquisites. Therefore, every step in your taxable income calculation is important. Meanwhile, on most tax facilitators website, the income tax calculator is already available to offer you a platform for the easy calculation of your taxable income.

Income tax calculator saves your time 

It's exhausting to plan one's taxes. It's just become more complicated after the new tax system was implemented. In a matter of seconds, the income tax calculator would help taxpayers measure taxes under both systems and assess which is better for them. As a result, it saves them a lot of time.

Simple to Use

The calculator is easy to run. All of a person’s incomes, deductions, and investment data are inputs.

Also Read: Salary Calculator 2020-21 – Take Home Salary Calculator India

Exemptions Allowed Under New Tax Regime 

  • Individuals or HUFs exercising the option under the proposed section will be entitled to the following allowances, as notified under section 10(14) of the Act:
  • A physically challenged employee is given a transportation allowance to cover the expense of commuting between his or her home and his or her place of work.
  • Transport Allowance given to cover the cost of transportation when performing office duties;
  • Any allowance given to help with the cost of a tour or a transfer;
  • Daily allowance to cover ordinary daily expenses incurred by an employee when away from his regular place of duty.

Now that we've covered the basics, we can move on to the practical side of things.

Details Required To Be Filled In Income Tax Calculator 

  • Personal information: name, age, gender, town (rent allowance)
  • Yearly income
  • Tax slab applicable
  • Section 80C deductions
  • ELSS-like instruments (equity linked saving scheme)
  • Insurance schemes on term
  • Insurance plans linked to the unit (ULIPs)
  • Providing fund for the public (PPF)
  • National Saving Certificates (NSCs), including Fixed Deposits (FDs) Banking
  • Section 80D Mediclaim Home Loan Deductions (Section 24B)

After you input all the above information into the income tax calculator, it gives you a summary of your level of income, investment and tax liability. It also shows you total tax payable split into the total tax on your income and the education cess. 

Also ReadGST Bill: India’s Biggest Tax Reform

Steps: How To Calculate Your Income Tax Online Through Income Tax Calculator 

How to Use Income Tax Calculator

Following are the steps to use the online tax calculator: For Salaried Individuals:

  1. Step 1: Choose the age bracket and choose the option, residence and occupation of your source of income.
  2. Step 2: Enter your salary details (as shown in your salary slip)- basic salary, house rent allowance, dearness allowance, special allowance and employee EPF contribution.
  3. Step 3: Next add other source income details —  interest income, pension income, deposit income and, finally, income from all other sources and winnings.
  4. Step 4: Add long-term and short-term capital gains for all assets such as stocks, mutual funds and Debentures etc.
  5. Step 5: List the other deductions (investments) under Section 80C, 80D and 80CCD.
  6. Step 6: Click on calculate now, and for the selected financial year you can see your income tax liability accordingly.

You can quickly know how much income tax you have to pay with this income tax calculator AY2020-21 in a simple click. 

Conclusion

Online income tax calculators make calculating your taxes easy and painless, so you don't have to stress about filing them at the last minute. Several life insurance companies and financial planning firms have such calculators on their websites to help you measure your net tax liabilities and deductions, as well as to suggest investment strategies that suit your financial profile, their incentives, and their potential to save you money on taxes. Hope you loved reading the article. Thanks for sharing your valuable time with the article. 

Frequently Asked Questions

How to calculate my income tax online?  Here's how your taxable income can be calculated:

  1. First step is the calculation of your gross salary through the addition of all taxable salary components - basic wages, desire benefits, HRA, special allowances & other allowances.
  2. When you receive this amount, add extra interest income, property rental, bonuses and other income if applicable.
  3. Add capital gains from all assets – instruments of equity or debt, real estate, non-listed shares etc.
  4. Deduct from your gross income all of the deductions — standard deductions of Rs. 50,000/- (all available), HRA.
  5. Further subtract deductions in accordance with Section 80C, 80D or other applicable deductions.

Now you can apply the tax slab for your net income.

Is filling income tax return mandatory? 

For those whose total income exceeds  Rs 2,50,000 the filing of income tax returns is mandatory. It is suggested that you file your income tax return, although your income does not exceed that amount.

How is TDS calculated in salary?

The employee's overall income over the year is calculated (including income tax, commission, bonus etc.). Next, the employees' declaration on their investments will be made. The investment proof is collected at the end of the yea is the basis for the calculation of the TDS.

What are the advantages of paying tax in advance? 

The amount that you will need for the payment of taxes is to be calculated in advance so that at the time of filing the return, you cannot reserve money. The other benefit is to know whether your taxes are going up or down as compared to the previous year. You will then not need to rush to arrange funds.

How is the tax collected by the government?

In three ways the government collects income in tax form: -Voluntary contributions such as advance tax and self-assessment tax. -Tax Deducted from Source (TDS), which is deducted before it is received at the point of origin of your income. -Source tax collected (TCS).

Why should I use an income tax calculator?

You can easily estimate your tax payment for the year with the help of an income tax calculator. It is an easy, quick and user friendly way to calculate how much your tax liability is and to calculate quickly and accurately.

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