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All about Online Income Tax Calculator

  • 17th Jan 2020
  • 655
All about Online Income Tax Calculator

wealth creation for the long-term. But this requires precise financial planning to invest in various tax-saving instruments. Investments like life insurance, provident fund, fixed deposit, and many more. Aid in saving on taxes. Read further to know how to calculate taxable income and the different eligible tax deductions.

Online Income Tax Calculator

You can find online tax calculators to aid in understanding your tax liability as to reduce your taxable income. This can be done by investing in financial instruments that give good returns and also serve the goal of paying less on taxes. The government of India encourages such investments of funds in multiple instruments for the movement of funds in the
economy. You can use the taxable income calculator to fulfill the below-given objectives:

  • To understand your tax liability
  • To reduce your taxable income and save money
  • To claim tax benefits under Section 80C to Section 80U
  • To invest in financial instruments that enable tax-savings

How to Calculate Taxable Income?

The online income tax calculator presents your tax liability by using your annual income, the tax slab applicable to you, the tax deductions under Section 80C and Section
80D. Some tax calculators may also give you different investment options. In your monthly salary, you have allowances that give you tax benefits like House Rent Allowance (HRA) and Leave Travel Allowance (LTA). Let’s consider the below-given salary break up is similar to your salary:

Components Amount
Basic INR 35,000
HRA INR 15,000
Special Allowance INR 5,000
LTA INR 25,000 (Yearly)

Now, from the annual salary earned by you, the amount of taxable income is given-below:

Components Amount (per annum) Exempted Amount Taxable Amount
Basic INR 4,20,000 - INR 4,20,000
HRA INR 1,80,000 INR 84,000 INR 96,000
Special Allowance INR 60,000 - INR 60,000
LTA INR 25,000 (Yearly) INR 18,000 INR 7,000
Standard Deduction - INR 50,000 -
Gross Total Taxable Salary INR 5,83,000

What is the Total Income Tax Liability?

To calculate income tax, you require the below-given figures:

  • Salary - Money paid by your employer
  • Income earned from a property - Money from any rented property or interest paid for a home loan
  • Income earned from other business - freelancing business
  • Income earned from other sources - interest from a savings account, fixed deposit or bonds
  • Income earned from capital gains - sale purchase of any house or share
  • Let’s assume you have invested in tax-savings instruments like Public Provident Fund (PPF), ELSS (Equity-Linked Savings Scheme), Employee Provident Fund (EPF), Fixed deposit, Savings deposit, Life and Medical insurance.

    Investments Amount
    PPF INR 50,000
    ELSS INR 20,000
    Interest from Fixed & Savings Deposit INR 8,400
    Life Insurance Premium INR 8,000
    EPF INR 72,000
    Medical Insurance Premiumlt INR 20,000

    Now, let’s look at the amount you can claim with the tax-savings investments:

    Tax-Saving Section Maximum Deduction Allowed Eligible Investment Amount Claimed
    Section 80C INR 1,50,000 PPF + ELSS + Life Insurance Premium + EFP = INR 50,000 + INR 20,000 + INR 8,000 + INR 72,000 INR 1,50,000
    Section 80D INR 25,000 for you + INR 50,000 for parents Medical Insurance Premium = INR 12,000 INR 12,000
    Section 80TTA INR 10,000 Interest from Fixed Deposit + Interest from Savings Deposit = INR 8,400 INR 8,400
    Total INR 1,70,400

    So the total taxable income is

    = Total annual salary + income from other sources
    - tax-savings investments

    = INR 5,83,000 + INR 18,000 - INR 1,70,400

    = INR 3,94,600

    Deductions Supported by the Income Tax Calculator

    1.Section 80C

    Under section 80C, you can
    claim a total tax deduction of up to INR 1,50,000 per year. Investments like
    ELSS, PPF, National Savings Certificate (NSC), premiums paid towards life
    insurance, Unit-Linked Insurance Plan (ULIP), fixed deposits, etc. can be
    claimed under 80C.

    2.Section 80D

    Under Section 80D, you can
    claim tax deductions for the medical expenses and health insurance for your
    family and yourself. A maximum deduction of INR 50,000 can be claimed where INR
    25,000 is for expenses of self and dependent family members and INR 50,000 for
    your parents if they are above the age of 60 years.

    3.Rent

    If you live in a rented place, then the rent can be claimed for tax exemption. You can claim this amount even if your employer doesn’t pay you House Rent Allowance. A maximum of
    INR 1,00,000 can be claimed by submitting relevant documents.

    The amount of HRA exempt from tax can be estimated from the below-given factors:

    1. The actual rent paid annually minus 10% of your basic salary

    2. The actual amount of HRA given to you annually

    3. 50% of your basic salary (for a metropolitan city)

    The minimum figure out of these three is the HRA that you can claim for tax deductions.

    4.Home Loan

    Under Section 24, you can
    claim a maximum amount of INR 2,00,000 paid towards the interest of a home
    loan. If you have taken a home loan in FY 2016-17, you can claim additional
    benefits of up to INR 50,000 under Section 80EE.

    Frequently Asked Question (FAQs)

    1.Is it mandatory for everyone to file their income tax returns?

    If your income is below the basic exemption limit then you are not required to file income tax returns. But if your income is less than INR 2.5 lakhs and you want to claim a tax refund then you can claim the refund by filing the tax returns. Other than for the cases given above, it is mandatory for everyone to file income tax returns.

    2.Can the income tax calculator estimate the amount of Tax Deducted at Source?

    No, the income tax calculator cannot estimate TDS.

    3.How much tax should I pay on my salary?

    The tax slab for various income is given below:

    Annual Income Taxes Applicable
    Up to Rs 2,50,000 Exempt from tax
    Rs 2,50,000 to Rs 5,00,000 5%
    Rs 5,00,000 to Rs 10,00,000 20%
    More than Rs Rs 10,00,000 30%

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