What is Income Tax Calculator?
An income tax calculator is an online tool that calculates the income tax liability and how much one can invest to save on tax. When the taxpayers can quantify the tax savings, it becomes easier for them to decide on investing in tax saving options.
Further, it is always helpful to know the actual tax liability depending on the total income and tax-saving investments one may have already made. This also gives a fair idea of the monthly tax deductions from the monthly salary, thus directly impacting the in-hand salary component.
How to use the income tax calculator for FY 2022-23 (AY 2023-24)?
An income tax calculator is an easy-to-use interface wherein the taxpayers must provide basic details like taxable income, investments made towards deductions under Section 80C, and the category of taxpayers depending upon age and gender.
The calculator deducts the investments made towards Section 80C as entered by the taxpayer but subject to the maximum of Rs. 1.50 lakhs and then calculates the income tax liability of the taxpayer. Further, the calculator also shows the available tax saving options to the taxpayers if the taxpayer has not availed of the total benefit under Section 80C.
Once the total income has been calculated, the tax liability depends on the tax slabs under the income tax laws. The income tax calculator currently assumes that the taxpayer has opted to continue paying taxes under the old tax regime. If the taxpayer opts for the new tax regime, they will not be eligible to claim tax deduction under Section 80C.
How to calculate income tax?
The income tax can be calculated as per the below table:
| Particulars | Amount (Rs.) |
|---|---|
| Calculate all the receipts during the previous year | XXXXXX |
| Less: exemptions allowed under Section 10 and other sections | (XXX) |
| Gross Total Income | XXXXXX |
| Less: Deductions under Chapter VI-A | XXXXXX |
| Calculate all the receipts during the previous year | (XXXX) |
| Total Income | XXXXXX |
| Income tax payable on Total Income as per the tax slabs | XXXXX |
| Less: Rebate under Section 87A (only available if the total income of the taxpayer is lower than Rs. 5 lakh) | (XX) |
| Income Tax payable | XXXX |
| Add: Education Cess at 4% | XXX |
| Add: Surcharge (applicable if the total income is more than Rs. 50 lakh) | XXX |
| Total Tax Payable | XXXX |
Taxpayers can avail of an optional tax regime wherein the tax rates are lower but available only after foregoing several tax exemptions, including HRA (House Rent Allowance) exemption, LTC (Leave Travel Concession) exemption, standard deduction of Rs. 50,000 to salaried taxpayers, deductions under Chapter VI-A, etc.
Income tax slabs for new & old regime (FY 2022-23 & AY 2023-24)
From 2020-21, Income Tax laws provided an optional tax regime to the taxpayers, wherein the taxpayers could avail the lower tax rates but only after foregoing several tax exemptions. Such tax exemptions and deductions include:
- HRA (House Rent Allowance) exemption.
- 8LTC (Leave Travel Concession) exemption.
- Standard deduction of Rs.50,000 to salaried taxpayers, deduction towards Professional Tax, deduction towards family pension, deductions under Chapter VI-A, etc. The income tax slabs under the new and old tax regimes are as below:
| Income slabs | New Tax Regime | Old Tax Regime |
|---|---|---|
| Up to Rs. 2,50,000 | Nil | Nil |
| From Rs. 2,50,001 to Rs. 5,00,000 | 5% | 5% |
| From Rs. 5,00,001 to Rs. 7,50,000 | 10% | 20% |
| From Rs. 7,50,001 to Rs. 10,00,000 | 15% | 20% |
| From Rs. 10,00,001 to Rs. 12,50,000 | 20% | 30% |
| From Rs. 12,50,001 to Rs. 15,00,000 | 25% | 30% |
| More than Rs. 15,00,000 | 30% | 30% |
However, even under the new tax regime, the taxpayers can benefit from a tax rebate under Section 87A, available to all taxpayers with a total income below Rs. 5 lakhs.
What are the benefits of filing income tax online?
Income tax rules require that any individual taxpayer have a total income exceeding the basic exemption limit, presently Rs. 2.50 lakhs must mandatorily their Income Tax Return (ITR) online.
Further, any taxpayer filing an ITR and claiming a refund is also required to file an ITR online. However, super senior citizens (above the age of 80 years) filing ITR-1 or ITR-4 can file the ITR online or physically.
Filing an ITR online provides several benefits to the taxpayers, including faster processing of their Income Tax Returns and refund through the ITR Central Processing Centre (CPC), maintenance of records in digital form and faceless correspondences by the Income Tax Department through e-mail/ Income tax Portal.
Important Terms and Definitions in Tax Calculation
- Previous Year –It refers to the period of 12 months from April 1 to March 31, for which the tax calculations are done, and tax returns filed accordingly
- Assessment Year –It is the financial year immediately succeeding the previous year, during which the tax liability is assessed and paid. For example, for the previous year, 2021-22, the assessment year would be 2022-23.
- Gross Total Income –It refers to the aggregate taxable income of the taxpayer before availing of the tax deductions.
- Total Income –It refers to the taxpayer's net taxable income after availing of all the tax deductions and denotes the income on which the income tax is calculated.
- Standard Deduction –It refers to the deduction of Rs. 50,000 allowed to the salaried taxpayers and is available to all the taxpayers irrespective of the quantum of salary/ pension.
- Tax Rebate under Section 87A –A tax rebate up to Rs. 12,500 is available to the taxpayers if their total income does not exceed Rs. 5 lakhs. The tax liability is directly reduced by the tax rebate available under Section 87A.
Frequently asked questions
Have questions? We are happy to help.
Income tax is calculated based on the taxable incomes earned during the year and the eligible tax saving payments and investments made by the taxpayer during the year. Once the net taxable income has been calculated, the income tax liability can be calculated depending upon the different tax slabs applicable to the taxpayer.Taxpayers can also avail of an optional tax regime wherein the tax rates are lower but available only after foregoing several tax exemptions, including HRA (House Rent Allowance) exemption, LTC (Leave Travel Concession) exemption, standard deduction of Rs. 50,000 to salaried taxpayers, deductions under Chapter VI-A, etc. Salaried taxpayers can switch between the new or old tax regime each year depending upon which tax regime results in lower tax liability for the taxpayer.
The tax payable on salary depends upon the breakup of the salary into different components, like allowances, perquisites, etc. Income tax laws provide exemptions for certain specified allowances subject to certain limits and specify the valuation rules for perquisites. The taxable allowances and perquisites are then added together and a standard deduction of Rs. 50,000 is allowed while calculating the taxable income from Salaries. The employer company is also obligated to deduct taxes monthly from the salary at the average tax rate as applicable to the taxpayer, which enables the total tax liability to be spread across the year.
The maximum non-taxable income limit often referred to as the Basic Exemption Limit, is currently Rs. 2.50 lakh. As such, taxpayers having income below this limit are not required to pay any tax. However, in the case of incomes taxable at special rates, the benefit of the basic exemption limit may not be available under the tax laws depending upon the type of income. Additionally, tax laws also provide a tax rebate under Section 87A, wherein the taxpayers can avail rebate up to Rs. 12,500 from their income tax liability if their income does not exceed Rs. 5 lakhs.
All the taxpayers whose taxable income exceeds Rs. 2.50 lakh during the previous year is required to mandatorily file an Income Tax Return with the Income Tax Department. Further, apart from the income criteria, certain additional criteria have been notified in April 2022 for the taxpayers to file an ITR mandatorily even if their taxable income is less than the basic exemption limit. Such criteria include gross turnover from business exceeding Rs. 60 lakhs, professional receipts exceeding Rs. 10 lakh, aggregate deposit in Savings account exceeds Rs. 50 lakhs in a year or a TDS deduction of Rs. 25,000 (Rs. 50,000 for senior citizens).
No, the Income Tax Calculator does not calculate for TDS (Taxes Deducted at Source). This is because TDS deductions are relative to each taxpayer and cannot be generalized. However, the taxpayer can always deduct the total TDS amount from the tax liability calculated by the Income tax calculator to arrive at the net Income tax payable. The taxpayers should also be diligent in matching the TDS claims with the Annual Tax Statement (Form 26AS) before claiming the same in their Income Tax Return. Any tax credit claimed but not present in Form 26AS will not be allowed during the computerized ITR processing.
While the Income Tax laws provide for mandatory filing of Income Tax Returns (ITRs) by the taxpayers in certain cases, any taxpayer holding a Permanent Account Number (PAN) can file an ITR to submit their income details with the Income Tax Department. One can file an ITR even if the taxable income is less than the basic exemption limit of Rs. 2.50 lakh, and there is no tax payable by the taxpayer.
When filing your income tax returns, one should be ready with the basic personal details like name, PAN (Permanent Account Number), address, e-mail address, Aadhaar Number, details of the taxable incomes earned during the previous year, details of the tax-saving payments and investments. Additionally, one would need the number of days of stay in India if the taxpayer is claiming Non-Resident status. Residential status assumes importance for the taxpayer as incomes not received or accrued within India are not taxable for Non-Residents. Further, the details of Taxes paid, including TDS, TCS, Advance Tax, etc. must be kept ready in the form of tax challans or Form 16A/ Form 16 for suitable details to be entered in the ITR to claim the credit for such taxes paid.
Section 10 lists down several incomes which are not taxable in India. Such incomes include interest on NRE accounts for Non-Residents receipt of amount under life insurance policy subject to specified limits interest on Public Provident Fund (PPF) account interest on recognized Provident Fund account subject to ceiling limit on interest rate gratuity income subject to specified limits exemptions towards specific allowances received by the salaried taxpayers in pursuance of official duties exemption towards House Rent Allowance (HRA) subject to specified limits allowances received by Members of Parliament/ Legislative Assemblies, etc.
The Income Tax Calculator has been customized for tax rates applicable to individual taxpayers under the old tax regime. As such, all such taxpayers can use this income tax calculator. The calculator calculates the aggregate tax liability after considering the tax deduction allowed under Section 80C. However, tax savings towards any additional tax deductions available for the taxpayers, including payment of Medical Insurance Premium under Section 80D, investment in New Pension Scheme (NPS) under Section 80CCD(1B), donations under Section 80G etc. must be adjusted by the taxpayer before arriving at the net income tax liability.
The Income Tax Calculator is an online tool which allows you to calculate the income tax liability and how much one can invest to save tax. UTI Mutual Fund has provided this tool on the website without any charges as a taxpayer-friendly measure. Accordingly, one is not required to pay anything to avail of the Income Tax Calculator facility on the website.
Presently, the Income Tax calculator has been customized to calculate taxes for individual taxpayers only. The income tax rates for partnership firms and foreign companies are different and accordingly, the income tax calculator cannot be currently used for calculating the tax liability of partnership firms and foreign companies. However, the income tax calculation for firms and foreign companies is simple as the tax rates are not slab-based but flat rates applied on total income.
Note: The tax provisions mentioned in the article are for illustrative purposes only and are updated as per the Union Budget 2022 presented in the Parliament in February 2022. The tax rates for capital gains will be as per the tax laws applicable on the date of redemption/ sale and not on the investment date.
Disclaimer: Disclaimer Equity Linked Savings Scheme (ELSS) is an open-ended equity linked saving scheme with a statutory lock in of 3 years and tax benefit. Minimum investment in equity & equity related instruments - 80% of total assets (in accordance with Equity Linked Saving Scheme, 2005 notified by Ministry of Finance). As per the present tax laws, eligible investors (Individual/HUF) are entitled to deduction from their gross total income, of the amount invested in equity linked saving scheme (ELSS) upto Rs. 1,50,000/- (along with other prescribed investments) under Section 80C of the Income Tax Act, 1961. Subject to prevailing tax laws.