A Quick Insight on How to Calculate Your Tax Amount

Every year, lots of people submit their income declaration forms and also submit the required documents. However, not all know how to calculate the tax amount. If you also don’t know how to calculate tax, you can use an income tax calculator.

An income tax calculator is an online tool available on many websites that can help you know an exact figure payable as the income tax.

Any person’s income exceeding the maximum limit is charged income tax at the rate set by the Income Tax Department. How much is taxed also depends on the taxpayer’s residential status. The income tax is what you pay on your income.

You will need to pay income tax if you stayed in India for 182 days during the last year or if you were in India for at least 60 years and at least 365 days during the last 4 years.

An individual’s total income is divided into 5 income heads such as:

  • Income from salaries

  • Income from housing properties

  • Profit/gains of profession or business

  • Capital gains

  • Income from any other sources

What is meant by the salaried income?

Salary is nothing but a source of earning or profit, offered by an employer to an employee in lieu of some services/tasks performed by the latter for them. It can also come to you along with an incentive in addition to the regular payment.

The money, which is the salary, is an employee’s right to rendering his/her services to the employer.

How to calculate your tax amount – Let’s calculate taxable income on salary

If you are unaware of how to calculate your tax amount, here are some quick steps that could help you calculate the taxable income on your salary. Have a look:

Before you can begin to calculate your taxable income on salary, you will need to gather some details needed to file your income tax returns.

The income tax regulations allow people to derive income from salaries, housing properties, and profit of business or profession, capital gains, and income from other sources.

Here is the procedure to help you calculate taxable income on your salary to help you know the clear picture:

  1. Collect your salary slips along with Form 16 for the existing financial year. Add all elements such as basic salary, TA, DA, DA on TA, HRA, and other reimbursements and allowances that are enlisted in your payslips and Form 16 (Part B)

  2. Add the bonus that you might have received during the fiscal year for the income that you wish to compute

  3. The total is the gross salary – deduct the exempted House Rent Allowance portion, Medical reimbursements (max exemption is Rs.1.5 lakh), transport allowance (max exemption is Rs.19,200, and all other reimbursements. The only thing is that you will need to furnish original bills in respect of the incurred expenditures

  4. The final result that you will get is your net income from the salary

  5. Once you have calculated your net income, you will need to pay income taxes as per your tax slabs.

Income Tax Slabs

  • Annual income up to Rs.2.5 lakh – Zero tax rates – zero health and education cess

  • Annual income between Rs.2.5 lakh to Rs.5 lakh – 5% tax rates and 3% of income tax on health and education cess

  • Annual income between Rs.5 lakh to Rs.10 lakh – 20% tax rates and 4% of income tax on health and education cess

  • Annual income above Rs.10 lakh – 30% tax rates and 4% of the income tax on health and education cess

You can also use the income tax calculator, an online tool available on many websites for free to calculate your taxable income super easy.