An Income tax calculator is an online tool which is designed to help you with tax calculations. Tax calculators make use of information related to your income, deductions and HRA exemption and provide an approximate figure of income tax liability which arises thereof.
Income Tax Calculator AY 2021-22
You can use the following income tax calculator to calculate income tax the amount you will be required to pay.
Assessment Year Vs. Financial Year Vs. Previous Year
- Assessment Year: When your income for a certain financial year is assessed in the coming financial year, it is referred to as an assessment year.
- Financial Year: The period between the current year’s April 1st and the following year’s March 31st. This is the time period wherein you are required to collate all your documents and submit your investment proofs.
- Previous Year: The financial year that acts as a precursor to the following assessment year. Your income for the current year is assessed in the next year (assessment year).
What is the difference between Exemption and Deduction?
Both exemption and deduction help reduce your tax liability, but these are availed under different sections of the Income Tax Act.
- Deduction is a reduction in the total taxable income based on Section 80 and Chapter VI-A. Specific kinds of spending such as investment in life insurance policies and payment of children’s tuition fee help you avail a tax deduction.
- Exemption is a specific amount that is excluded from the gross total income before calculating tax. Exemptions are available under Sections 10 and 54. Interest earned from tax-free bonds and salary components like LTA are examples of exemptions.
Sources of Income & Calculation in Income Tax Calculator
As per the rules and regulations stated by the Income Tax Department of India, an individual is allowed, at all points of time, to have 5 sources namely, salary income, capital gains, house property income, business income, and income from other sources. Generation of any kind of income will be taxable, provided you (the tax-assessee) categorise each income under the aforementioned sources.
- Income from Salary
- Gather all your salary slips and the essential Form 16 of the ongoing financial year. Add up all your stipends and allowances (this includes your basic salary, TA, DA, HRA, DA on TA, reimbursements) that is listed in your payslip and the Form 16 (Part B). Once this is done, add your bonus.
- The total value that you get after computing all this will be termed as your gross income.
- Make the following deductions from your gross income - HRA exemption and allowance for transportation (the exemption limit is Rs.19200 p.a.)
- The total result will act as your net income.
- Income from House Property
- Take into consideration the Fair Market Value (FMV) and the valuation estimated by municipal authorities (Municipal Valuation). Take the amount that is higher in value and this shall be your expected rent.
- Compare the rent you receive (the Actual Rent) with the aforementioned expected rent and you have your Gross Annual Value for the house.
- You can compute the Net Annual Value (NAV) by deducting the already paid municipal taxes during the GAV year. Deduct the same from the NAV to comprehend the loss or income from your housing property. 30% of NAV - Interest paid annually on the loan amount (if taken to buy the said house
- Income from Capital Gains
- Calculate your long-term capital gains from your total sales of assets.
- Calculate your short-term capital gains from the total sales of capital assets.
- Deductions are to be claimed after this.
The Income Tax Department of India lists 5 sources of income under which each person can designate their income. One such source is your income from salary. You can make efficient use of your income tax calculator to evaluate the entire value.
Your income from salary can be calculated by using the TDS certificate, that is a part of Form 16. Note that, your employer is supposed to provide you with a Form 16. This can be achieved in the following ways:
House property incomes are those which the assessee receives every month in the form of rental payment. In case, the tax-assessee has the possession of only one house, and that too is self-occupied then also he has to compute his income through property.
Calculate the GAV (Gross Annual Value) of your rented house property in the following ways:
The nature and number of transactions usually determine the computation of income from capital gains. It can be attained in the following manner:
Steps for Income Tax Calculation
- First and foremost, ascertain your adjusted gross income.
- Thereafter, compute your federal taxable income and the consequent tax. This encompasses establishing your itemized deductions, calculating the said deductions and then finally subtracting them.
- arry out the computation of final tax and exemptions. In this, you first compute the exemptions that you are allowed, then ascertain your gross income tax for the present financial year and finally, exclude any credits that you might be eligible for.
There are a thousand different components in each of these steps. It is always advisable to conduct thorough research before one starts calculating his/her tax.
Calculate Income Tax on Salary with an Example
Your salary is inclusive of Transport Allowance, Special Allowance, House Rent Allowance (HRA), and Basic Salary. In the old regime, certain salary components such as leave travel allowance, telephone bill reimbursement, and a part of the HRA were exempt from tax. However, if you choose the new regime, these exemptions are not available.
Given below is an example of how tax calculation works under the new regime when compared to the old one:
Assumptions
Basis Salary: Rs.90,000 per month
HRA: Rs.45,000 per month
Special allowance: Rs.20,000 per month
Leave Travel Allowance: Rs.18,000 per year
Rent that is Paid: Rs.25,000 per month
| Components | Amount | Deductions | Taxable amount under the old scheme | Taxable amount under the new scheme |
|---|---|---|---|---|
| Basis Salary | Rs.10,80,000 | Rs.10,80,000 | Rs.10,80,000 | |
| Special Allowance | Rs.2,40,000 | Rs.2,40,000 | Rs.2,40,000 | |
| HRA | Rs.5,40,000 | Rs.3,00,000 | Rs.2,40,000 | Rs.5,40,000 |
| LTA | Rs.18,000 | Rs.10,000 (bills must be submitted) | Rs.8,000 | Rs.18,000 |
| Deductions (Standard) | - | Rs.50,000 | Rs.50,000 | - |
| Gross Income | Rs.15,80,000 | Rs.18,78,000 |
In order to calculate income tax, the below-mentioned details must be included:
- Salary.
- Rental income or interest that is paid for a home loan.
- Income from your profession, business, or freelancing.
- Income that is generated from selling shares or a house.
- Interest that is generated from a fixed deposit account, savings account, or bonds.
Under the new regime, several exemptions such as telephone bill reimbursement, investments made in savings instruments such as PPF, NPS, EPF, etc., and HRA are not available. The calculation of the gross taxable income under the new regime and the old regime are mentioned below:
New Regime
Calculation of Gross Taxable Income
| Components | Amount | Total |
|---|---|---|
| Salary | Rs.18,78,000 | |
| Income that is generated from other sources | Rs.30,000 | |
| Gross Total Income | Rs.19,08,000 | |
| Total Income Tax | Rs.3,22,296 |
| Components | Percentage | Taxable Amount |
|---|---|---|
| Up to Rs.2,50,000 | No tax needs to be paid | 0 |
| Rs.2,50,000 – Rs.5,00,000 | 5% (Rs.5 lakh – Rs.2.5 lakh) | Rs.12,500 |
| Rs.5,00,000 – Rs.7,50,000 | 10% (Rs.7.5 lakh – Rs.5 lakh) | Rs.25,000 |
| Rs.7,50,000 – Rs.10,00,000 | 15% (Rs.10 lakh – Rs.7.5 lakh) | Rs.37,500 |
| Rs.10,00,000 – Rs.12,50,000 | 20% (Rs.12.5 lakh – Rs.10 lakh) | Rs.50,000 |
| Rs.12,50,000 – Rs.15,00,000 | 25% (Rs.15 lakh – Rs.12.5 lakh) | Rs.62,500 |
| Above Rs.15,00,000 | 30% (Rs.19.08 lakh – Rs.15 lakh) | 1,22,400 |
| Cess | 4% (Rs.12,500 + Rs.25,000 + Rs.37,500 + Rs.50,000 + Rs.62,500+ Rs.1,13,400) | Rs.12,396 |
| Total Income Tax | Rs.3,22,296 |
Old Regime
Assumptions
Interest generated from Savings Account: Rs.5,000
PPF: Rs.40,000
ELSS: Rs.10,000
LIC Premium: Rs.6,000
Medical Insurance: Rs.10,000
EPF Contribution: Rs.1,15,200 can be claimed in a year
| Type of Deduction | Maximum Deduction | Eligible Amount | Amount Claimed |
|---|---|---|---|
| Section 80C | Rs.1,50,000 | Rs.40,000 + Rs.10,000 + Rs.6,000 + Rs.1,15,200 | Rs.1,50,000 |
| Section 80D | Rs.25,000 (self) Rs.50,000 (parents) | Rs.10,000 | Rs.10,000 |
| Section 80TTA | Rs.10,000 | Rs.5,000 | Rs.5,000 |
| Total | Rs.1,65,000 |
Calculation of Gross Taxable Income
| Components | Amount | Total |
|---|---|---|
| Salary | Rs.15,80,000 | |
| Income that is generated from other sources | Rs.30,000 | |
| Gross Total Income | Rs.16,10,000 | |
| Deductions under Section 80C | Rs.1,50,000 | |
| Deductions under Section 80D | Rs.10,000 | |
| Deductions under Section 80TTA | Rs.5,0000 | Rs.1,65,000 |
| Gross Income that is Taxable | Rs.14,45,000 | |
| Payable Tax, inclusive of Cess | Rs.2,55,840 |
| Components | Percentage | Taxable Amount |
|---|---|---|
| Up to Rs.2,50,000 | No tax needs to be paid | 0 |
| Rs.2,50,000 – Rs.5,00,000 | 5% (Rs.5 lakh – Rs.2.5 lakh) | Rs.12,500 |
| Rs.5,00,000 – Rs.10,00,000 | 20% (Rs.10 lakh – Rs.5 lakh) | Rs.1,00,000 |
| Above Rs.10 lakh | 30% (Rs.14.45 lakh – Rs.10 lakh) | Rs.1,33,500 |
| Cess | 4% (Rs.12,500 + Rs.1,00,000 + Rs.1,33,500) | Rs.9,840 |
| Total Income Tax | Rs.2,55,840 |
FAQ's on Income Tax Calculator
- Can I avail the Income Tax Calculator facility on the official website of Income Tax Department India?
- Visit the official website of Income Tax Department
- Scroll down and under ‘Important Links’ you will be able to find ‘Tax Calculator’
- Click on tax calculator and you will be directed to a new page
- Enter the details as required, and you will be able to view the total tax liability
- For which assessment year can I calculate my tax liability?
- Who all can use this income tax calculator?
- Do I have to pay anything to avail the Income Tax Calculator facility?
- Can firms and foreign companies use the Income Tax Calculator?
Yes, you can visit the official website of Income Tax Department and follow the steps to calculate your tax:
You can calculate your tax liability for year 2020-21 on the Income Tax Department of India.
All those who are eligible to pay their income tax can use this calculator.
No, you can use the facility for free. You do not have to pay anything.
Yes, firms, companies, and foreign companies can also use the income tax calculator facility available on the Income Tax Department of India.
