Achieve Your Financial Goal With an Income Tax Calculator
Income Tax Calculator helps you set up financial goals to make organized expenditures, prepares you for sudden emergencies, and helps with retirement planning. Moreover, financial planning involves you making an informed choice to allocate your hard-earned money to the best investment options. However, many people ignore the important aspects of financial planning, which include paying taxes and filing tax returns.
As an honest taxpayer, you can claim several deductions under Section 80C of the Income Tax Act, 1961, on investments. Those investments include PPF, SCSS, and EPF, as well as any specific post office schemes or even government-launched schemes. The income tax calculator comes in very handy to determine the actual payable amount and deductions.
What is the Income Tax Calculator?
The Income tax calculator helps salaried persons or investors determine the actual taxable amount they have to pay after deductions under Section 80C.
With online tools that show precise payable tax, using income tax calculators has become quite easy. However, for novice taxpayers, understanding the deductions and tax slab might be difficult.
Income is basically an aggregate of salary, HRA, allowance, and interest. Sources like gains from capital, income from business, or progression are included when calculating taxable income.
However, components like rent, LTA, and bills are exempt from tax. After determining all these variables, let's understand how tax is calculated manually.
How Income Tax Calculator Works
An income tax calculator can swiftly calculate your precise payable tax amount with just a few taps. To make it accurate, let’s see how the taxable amount is calculated manually.
Under the new regime, taxpayers will receive Rs 75,000. If they file their return under the old regime, they will receive a deduction of Rs 50,000.
According to the new tax slab of 2024, the first Rs 3 lakh of income is exempt, and 5% will be marginally charged on the next Rs 3 lakh of income. You would be required to pay 10% of the next Rs 7 lakh, and if your income exceeds Rs 10 lakh, you have to pay 15% of the entire amount.
You can claim Rs 1.5 lakh worth of deduction under Section 80C and an additional Rs 50,000 if you are investing in NPS.
If you have any home loan or personal loan, you'll get tax benefits deductions on the home loan EMI, which can be calculated through the EMI calculator. Now, moving on to the example.
Ayush's annual salary is Rs 10,00,000. His taxable amount would be Rs 8,50,000 because of his first Rs 2,50,000 exemption, and his investment in PPF and ELSS is worth Rs 1.5 lakh.
Additionally, he has health insurance for himself and his family, for which he pays Rs 20,000 as a premium. The taxable amount would be Rs 8,50,000 minus Rs 50,000 under the old regime and excluding another Rs 1.5 lakh and Rs 20,000. That makes up his total taxed salary of Rs 6,30,000.
The first Rs 3 lakh would be exempted, and then the next Rs 3 lakh would be Rs 15,000, and for the next Rs 7 lakh (Rs 1,30,000), Rs 13,000 would be charged. Calculating the tax payable manually might not be accurate. This is why there are several online Income tax calculators to make this process efficient and accurate.
Advantage of Income Tax Calculator
Understanding these tax deductions can save you a lot of money, which can be utilized for better financial planning. You'll get an idea of the accurate tax payable amount that will assist you in managing other expenses.
An Income tax calculator can be used anytime, anywhere, with just a few requirements needed to present. With an online income tax calculator, the task of accumulating accurate payable amounts becomes more accessible and more convenient.
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