Income Tax Calculator

Jan 21, 2019 | 3 months ago | Read Time: 4 minutes | By Manan Vyas

Introduction

Income tax calculation and income tax filing can be incredibly stressful and time-consuming for everyone. Shuffling hours of paperwork while ensuring nothing is left out of your filing can be extremely tiring. You can avoid the last minute rush and stress of any discrepancy at the time of filing returns by assessing how much income tax you need to pay in advance.

Income Tax Calculator

While there are several factors that need to be taken into consideration, including your taxable income, age, exemptions, if you follow the steps given below and use an accurate income tax calculation tool such as the one provided by Aegon Life, you will be able to get a precise calculation of how much income tax you owe.

An income tax calculator is a special tool that not only helps you calculate your taxable income and helps you determine your overall tax liability to know where you can avail tax saving. The calculator uses information such as your:

  • Personal details: name, age, gender, city (rent allowance)
  • Annual income
  • Applicable tax slab
  • Deductions under Section 80C
    • Instruments such as ELSS (equity linked saving scheme)
    • Term insurance plans
    • Unit-linked insurance plans (ULIPs)
    • Public provident fund (PPF)
    • Bank fixed deposits (FDs)
    • National Saving Certificates (NSCs), amongst others
  • Deductions under Section 80D
    • Mediclaim
  • Home Loan (Section 24B)

After you input all the above information into the calculator, it gives you a summary of your level of income, investment and tax liability. It also shows you total tax payable split into the total tax on your income and the education cess.

How to Calculate Income Tax?

  • The first step to calculate income tax is to calculate your income from all sources. This includes your income from:
    • Salary
    • House Property (Rental income)
    • Capital Gains
    • Freelancing
    • Other sources: interest, FD interest amongst others
  • Now you must add any Housing Rent Allowance (HRA), any special allowance and any other transport allowance to this income.
  • It is important to note that some components of your salary such as phone bills, and medical reimbursements from exempt from tax.
  • Perform all applicable deductions under Section 80C and D.
  • Now you can calculate your income tax as per the applicable income slab your income falls in and add a 3% cess to the same.

 

How to Use the Income Tax Calculator?

In order to calculate your overall tax liability and tax due, individuals are required to enter relevant information into the income tax calculator. It is important to remember that your overall income includes all your income from your salary, any income from any housing property, any capital gains, income from freelancing or business, and income from other sources such as interest from fixed deposits amongst othe₹  After you have calculated your overall income, you will enter all the below-given information into the income tax calculator:

  • Personal details: name, age, gender, city (rent allowance)
  • Annual income
  • Applicable tax slab
  • Deductions under Section 80C
    • Instruments such as ELSS (equity linked saving scheme)
    • Term insurance plans
    • Unit-linked insurance plans (ULIPs)
    • Public provident fund (PPF)
    • Bank fixed deposits (FDs)
    • National Saving Certificates (NSCs), amongst others
  • Deductions under Section 80D
    • Mediclaim
  • Home Loan (Section 24B)

Income Tax Calculator FAQs

1. What all income should be included in order to calculate my overall tax liability?

As per section 14 of the Income Tax Act, your overall income includes all your income from your salary, any income from any housing property, any capital gains, income from freelancing or business, and income from other sources such as interest from fixed deposits amongst othe₹  This is your gross total income.

2. Do I have to file an e-file Income Tax Return?

It is mandatory to e-file your income tax returns if your individual income is more than ₹  5 lakh.

3. Do I still have to file returns if my employer already pays TDS?

Regardless of whether taxes are already paid on your salary, you have to file a return if your income exceeds ₹  2,50,000, NRI or not. This is because your employer may not be aware of other forms of income, such as interest income or capital gains income, or may not have given you a tax deduction for investments you did not submit a proof for. Filing your tax returns is the only way to ensure your tax is calculated correctly.

4. Do I have to do anything after I file my return?

If you have filed your income tax return form without a digital signature, after you file     your return, the IT department will generate an ITR-V form to verify the legitimacy of your filing. You can download this form from the Income Tax India website or it will also be delivered to you by post. Individuals must print, sign and send this document to CPC Bangalore within 120 days from the date of e-filing to verify their returns.

5. What is the deadline to file my income tax return?

The last day to file your returns is July 31st. If you fail to submit your returns by July 31 of the current year, you can file it by March 31 of the next year.

Conclusion

Online income tax calculators are a simple and incredibly hassle-free way of calculating your income tax without panicking about filing them at the last moment. Several life insurance companies and financial advisory companies provide such calculators on their website to help you calculate your overall tax liability and deductions, and also recommend investment options that suit your financial portfolio, their benefits, and their tax saving ability.

Other Tax Articles:

1. ITR 1 Form
2. Income Tax Act
3. Income Tax E-Filing in India
4. Income Tax Slab FY 2018-19
5. Section 80D Deduction

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