Know How to Calculate your Income Tax with a Tax Calculator

Filing income tax once a year is the social responsibility of every citizen. A lot of people think that this is a voluntary option and do not pay their taxes on time or at all. Some of you may not know how to calculate and because of that do not know how much you need to pay. You can use an income tax calculator for calculating it without any hassle and mistakes. 

How to use an income tax calculator online?

Using a calculator online is fairly easy, all you need to do is follow these simple steps: 

Step 1: Select the assessment year (AY) for which you want to calculate the tax.

If you are looking for the financial year (FY) 2023-24, then the AY would be 2024-25. You can select this from the drop-down menu. 

Step 2: Select your age and gender, as income tax in India is different for different age groups and genders. 

Step 3: Fill out the ‘Income field’. 

Here you need to provide details about your gross salary (annual or monthly salary paid without deductions). You have to fill in details about your annual income from any other sources as well. 

Step 4: Click on the ‘Deductions’ field and enter the details of various deductions. 

Basic deductions are under Section 87A, 80D, 80CCD (1B), 80C, 80G, 80TTA,  80E, 80TTB, and 80GG. 

Step 5: Select HRA exemptions and fill out for basic salary, DA, and total rent paid per annum.

Step 6: Select whether you live in a metro city and click on calculate button to get your tax liability. 

What is an income tax calculator? 

An income tax calculator is an online tool which can help you to evaluate your taxes on the basis of your income and age group after the announcement of the Union Budget for the year. If you fall under the taxpayer's category then you have to pay a certain specific portion of your salary as tax. Income tax can be paid either as TDS (Tax Deducted at Source) when you get your monthly salary, or through the income tax returns portal managed by the CBDT (Central Board of Direct Taxes). There is a provision for online payments so that an individual can pay their stipulated dues on the income that they are generating from other sources. 

What are income tax slabs?

In India, the income tax system works on the basis of a slab system and the government charges tax accordingly to the section you fall in. Slab means the varied tax rate charged for different incomes. The more your income is, the more you will have to pay. These slabs are revised every year and people get to know them through the budget announcements.

The slab rates are segregated for different categories of taxpayers. As per the income tax of India, there are three categories of ‘individual’ taxpayers:

• Individuals below 60 years of age

• Senior citizens from 60-80 years of age

• Super senior citizens who are more than 80 years of age 

Benefits of filing for an ITR

An individual has to pay taxes after their income surpasses a certain amount, to pay the tax you have to file an ITR (Income Tax Return). Some of its benefits are:

It can help you while applying for loans

Banks ask for at least the last two years of your ITR file when you apply for a home loan. Through this, they can access your past and current financial situation and analyse whether you will be able to pay the loan or not. 

Some financial institutions in India also provide pre-approved offers on their products like home loans and loans against property. These offers can speed up your loan application procedure. Individuals can check for these offers by filling in the required information such as name and contact details. 

It can serve as a legal document

ITR has a lot of legal value and can be useful in two ways:

• Income proof - the file contains a detailed list of your income and expenses based on which tax is calculated. Hence, when you want to purchase a property you can show this as proof. 

• Identity proof - you can use it as identity proof while applying for an Aadhar card, the government also accepts it as address proof in some cases. 

It can save you money 

The government gives several tax benefits and allows certain deductions to reduce some burden off taxpayers and to encourage more people to pay taxes. But you can only claim the deductions and tax benefits after you have filed for your ITR.

Helps you in avoiding penalties and punishment 

Under the Income Tax Act 1961 you are liable to pay tax if you fall above the exempt criteria. If you do not pay taxes after falling in the payable category then the government can penalise you for up to Rs5000. Other types of penalties or punishments can also be given so it is advisable to pay your taxes on time. 

Helps you in carrying forward your losses

You can carry forward your losses of a particular year to the subsequent year under some provisions of the Income Tax Act 1961. This benefit is only available if you are paying income tax and filing for ITR. 

It is very essential that a person their taxes on time. The government of India is providing several benefits to ease the load on the taxpayer, according to the new income tax slab individuals with a salary above Rs6,00,000 have to pay taxes. If you are facing difficulties in calculating your taxes then take help from an online tax calculator and have a hassle-free experience.