Income Tax Calculator

The income tax calculator is a quick and easy-to-use online tool that can be found on the official website of the Income Tax Department as well as on other third-party websites.

The tax calculator can be used to get an estimate of the taxes you pay based on your taxable income and your deductible investment and expenses. However, your taxable income determination will also be subject to new changes that may be presented in the Union Budget in India each year. Therefore, while using the tax calculator, it is important to choose the correct financial year for which you want to file your taxes.

An important feature of the income tax calculator is that the tool will consider your age, income, expenses, investments, the interest paid on your home loans, and various other details to give you the results. Moreover, it also generates the estimate of the income tax payable based on the tax regime (old or new) as well as the tax slab of the taxpayer.

How to Use the Income Tax Calculator?
 

Using the income tax calculator is simple, and you can get an estimate of your taxable income in a matter of minutes after filling in the right details. Here is how you can use the online income tax calculator:

• Visit the Tata AIA Life Insurance official website and go to the Income Tax Calculator page.
• Select your age bracket so that the correct tax slab rates can be applied.
• Mention your annual salary – this should include all your bonuses and variables.
• Next, fill in the other fields with your investment details and mention the amount under Section 80C and 80CCD(1B)
• If you have a health insurance policy or health riders^@ with your life insurance plans, mention the same under Section 80D.
• If you are living in a rented home, mention the rent amount and the HRA received.
• In case of a home loan that is being repaid, mention the interest paid so that it can be considered a deduction from your taxable income.
• In case of an educational loan that is being repaid, mention the interest paid to have it counted as a deduction from your taxable income.
• After submitting all these details correctly, you will be able to view an estimation of your taxable income and the income tax payable.

How to Calculate Income Tax for FY 2022-23?

The income earned from your salary is the sum of the basic salary, the HRA (House Rent Allowance), special allowance, transport allowance, and any other type of allowance. Some of these allowances and components are exempt from taxes. If you are living on rent and receiving an HRA, you can claim an exemption on the HRA.

Apart from these exemptions, a standard deduction of ₹40,000 has been applicable since its introduction during Budget 2018. Since 2019, the standard deduction has been increased to ₹50,000. Under the old tax regime, there are several tax saving investments which enable you to avail of tax deductions under Section 80C of the Income Tax Act. Moreover, Section 24B of the Income Tax Act enables you to claim deduction of up to ₹2,00,000 on the interest for a loan taken to purchase, renovate or construct a new home.

If a taxpayer opts for the new tax regime, they cannot avail of these exemptions and deductions.

For instance, Ruhi has a basic salary of ₹1,00,000 per month and an HRA of ₹50,000, a Special Allowance of ₹21,000 per month, and an LTA of ₹20,000 annually. Let’s assume that she pays a rent of ₹40,000 and lives in Mumbai. This is what her taxable income looks like as per the old and new tax regime:

To be able to calculate her income tax, she needs to include her income from all the sources:

• Income from Salary
• Income from house property
• Income from capital gains
• Income from business/profession
• Income from other sources (interest from saving account interest income, etc.)
   

Let’s say Ruhi is earning an income of ₹8,000 from the interest on her savings account as well as an income of ₹12,000 from her fixed deposit during the financial year. She has also invested in a PPF with ₹50,000, an ELSS of ₹20,000, a life insurance premium of ₹8,000, and a medical insurance premium of ₹12,000 for the year. Therefore, under the old tax regime, she can claim deductions on these investments.

How to Calculate Gross Taxable Income in India?
 

Sample Illustration of the Income Tax Slab for an Individual below 60 Years of Age with Gross Annual Income of ₹10 Lakh

Sample Illustration of the Income Tax Slab for an Individual below 60 Years of Age with Gross Annual Income of ₹20 Lakh

Income Tax Deductions and Exemptions for Salaried Individuals

Since there are various components in your salary which are taken into consideration while calculating your income tax and some of these are exempt from tax, you should use an online income tax calculator to know your gross taxable income. These are the following steps to help you know your tax liability:
 

1. Calculate Gross Income
   

   Make a note of your total income, which should include all your allowances. Some of these main exemptions on your salary may include HRA, Leave Travel Allowance (LTA), and so on. These should be removed from your gross annual salary.
   
   The House Rent Allowance can be as given below:

   • House rent allowance received from the employer
   • Actual rent paid excluding 10% of basic + DA monthly salary
   • For metro cities – 50% of basic salary
   • For non-metro cities – 40% of basic salary
      

   Select the one that is the least, and mention that in the income tax calculator online. It is also possible to claim a standard deduction of ₹50,000 from your annual income for FY 2021-22 and FY2022-23. You can deduct the HRA and the standard deduction with the help of the income tax calculator.
   
   After this, declare income from other sources such as interest earned on deposits, capital gains, and so on. This will give you your total gross income.
    

2. Calculate Net Taxable Income

   At this step, compile and calculate your different tax-saving investment options. Under Section 80C of the Income Tax Act, 1961, you can lower your taxable income by investing in some tax-saving investments. The standard tax-saving options are:
   

   • Life insurance Plans
   • Unit Linked Insurance Plans
   • National Pension System (NPS)
   • Equity Linked Savings Scheme (ELSS)
   • Mutual Funds
   • Public Provident Fund (PPF)
      

   These are the various tax-saving sections on your online income tax calculator:

   • Section 80C
     
     

     Under this section, individuals, as well as members of Hindu Undivided Family (HUF), can claim tax deductions up to ₹1.5 Lakh on various investments such as life insurance policies, Employee Provident Fund (EPF), Public Provident Fund (PPF), and more.

   • Section 80CCD (1)
     
     

     If you invest in the National Pension System (NPS), you can avail of a tax deduction under Section 80CCD (1). If you are a salaried employee, you can claim a deduction of up to ₹1.5 Lakh on 10% of your gross salary under section 80 CCE.

   • Section 80CCD (1B)
     
     

     As a salaried or self-employed individual, you can avail of yet another tax deduction of ₹50,000 under Section 80CCD (1B), apart from the deductions under Section 80C. Hence, collectively, you can save up to ₹2 Lakh under Section 80C and Section 80CCD (1B).

   • Section 80D
     
     

     If you are paying premiums for health insurance premiums or life insurance premiums for health riders attached to your life insurance plans, you can avail of tax deductions under Section 80D, as an individual or as a HUF. In the case of a health insurance policy, the maximum deduction that can be claimed is calculated so:

     • A deduction of ₹25,000 on a medical insurance plan for self (below 60 years of age), spouse, and your children.
     • Additional deduction of ₹25,000 on a medical insurance policy for your parents less than 60 years of age.
     • Additional deduction of ₹50,000 if you and your parents are both above 60 years of age.
     • By declaring the total amount of health insurance premium paid in a year, you can calculate the tax payable on the income tax calculator.
        
   • Section 80DD
     
     

     Under this section, an individual or HUF can claim deductions for medical expenses paid towards a dependent specially-abled family member. Depending on the nature and the extent of the disability, the deduction available can go up to ₹1.25 Lakh.

   • Section 80E
     
     

     As an individual, you can enjoy a deduction for 8 years on the interest paid towards an education loan under Section 80E of the Income Tax Act.
      

3. Tax Slab Based on Net Taxable Income
   
   

   After the new tax regime was added in the Union Budget FY2021-2022, the old tax regime, as well as the new one, is still applicable after the Union Budget 2022-2023. The new tax regime has made the calculation of income tax liability simpler; you can also use an online IT calculator to know your tax liability.
   
   After subtracting all the applicable deductions from your annual income with the income tax rate calculator, you get your net taxable income. According to the existing tax slab rates, the taxes should be paid as per the taxpayer category you fall under. When consolidating the net tax payable after the deductions (through tax-saving investments), check if you are eligible for a rebate under Section 87A.
   
   

Rebate under Section 87A
 

Tax rebate benefit offered to taxpayers by the Indian Government if one’s net taxable income is below ₹5 Lakh. So, if your total taxable income does not exceed ₹5 Lakh, an additional rebate of up to ₹12,500 can be claimed on the total tax payable, which does not include the health and education cess of 4%. But if the net taxable income is more than ₹5 Lakh, you cannot benefit from a tax rebate under this section.
 

Benefits of Filing Income Tax Online
 

If you earn more than the basic exemption limit, you will have to file your income tax returns. And an online IT calculator can help you understand how much income tax you should pay. Also, those who have a taxable income of less than the exemption limit can file a nil return. These are the benefits of filing your income tax returns online:

• The entire e-filing process is quick and can be carried out at your convenience.
• The transfer of refunds online takes place faster during e-filing.
• The confirmation of and the updates on your ITR status are prompt.
• The online tax returns filing process is secure since none of your private or financial details will be stored.
• The ITR statement can be presented as proof of income and proof of address when applying for a visa, loan, or life insurance plan.
• Since e-filing your returns is quick and easy, you can carry out the process yourself and avoid late fees and penalties.

Eligibility Criteria to File Income Tax Returns
 

Any individual whose income is above the maximum exemption limit or whose income can be taxed as per the income tax slabs should file income tax returns. For FY 2022-2023, individuals below 60 years of age have an exemption limit of ₹2.5 Lakh for a financial year. For senior citizens (between 60-80 years of age), the exemption limit is ₹3 Lakh. And for super senior citizens (above 80 years of age), the exemption limit is ₹5 Lakh.

The tax laws pertaining to payment of taxes and filing of income tax returns also apply to Hindu Undivided Families (HUFs), Association of Persons (AOPs), Body of Individuals (BOI), Artificial Judicial Persons, local authorities, companies, and firms.