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Income Tax Calculator for Different Income Groups in India

By archana singh

Every person who has any source of income is entitled to pay taxes. The source of income could be monthly salary, a business profit turnover or even a regular freelancing job. The entire process of calculating taxes is based on the norms and slabs laid out by the Income Tax Department of India.

What Is Income Tax?

Income tax is calculated based on the annual income that is accrued from various sources. As the income increases the tax applicable on the income also increases. Various portals give users the options of an online income tax calculator where they can provide the details and get the anticipated tax amount made available to them.

How Is Income Tax Calculated?

But let us understand how an income tax is calculated in the first place. An income tax calculator will ask for the basic details such as your entity (if you are an individual or a senior citizen or a business person), the financial year you want to calculate the tax for, your age, income details, etc. Once you fill out the details.

Income Tax Slabs

Income tax is calculated based on a slab which ranges from 5-30% depending on the age group. Any amount until 2.5 lakhs is non-taxable as per law. The slab below lists out the entire range for individuals and business under the age of 60 until Financial Year 2016-2017:

Slab Income

Tax Rate

Till Rs.2,50,000

No Tax

Rs.2,50,000 - Rs.5,00,000

10 percent

Rs.5,00,000 - Rs.10,00,000

20 percent

Rs.10,00,000 and beyond

30 percent

 

In case you are an individual above the age of 60, the below tax slab will be used for calculation of your income tax:

Slab Income

Tax Rate

Till Rs.2,50,000

No Tax

Rs.2,50,000 - Rs.5,00,000

5 percent

Rs.5,00,000 - Rs.10,00,000

20 percent

Rs.10,00,000 and beyond

30 percent

How Is Income Tax Calculated For Salaried Individuals?

Income tax calculator treats salaried individuals no different. Income is calculated as the total of house rent allowance, conveyance and other allowances. Most organisations give employees an option to save taxes in the form of variable allowances which forms the basis of food coupons, drivers’ salary, telephone reimbursement plans, medical reimbursement and other features which can be deducted from the monthly salary.

Usually, the official income tax calculator takes into account the HRA declared as a part of the investment plan and exempts it from the calculation. A maximum of 8883 INR per month is allowed to be non-taxable in metros. Any amount over that asks for PAN card of the owner and an agreement.  Another deduction under 80C as declared by the individual is also exempted from the tax. 80C allows 1.5 lakhs as a rebate amount.  This can include investments in LIC, Fixed deposits, ELSS, public provident fund, Medical Insurance, Tuition fees for your kids and multiple other schemes.

The income tax calculator also exempts any donations made under Section 80D as non-taxable. The employer contribution to EPF which is deducted from your salary is also exempted from any taxes.  Finally, the income tax calculator takes into account the difference of the annual income and the gross salary which is calculated after deductions and computes the net taxable income. This taxable income is compared against the slab based on your age group.

Income tax calculator now computes the compounded tax and adds an extra 3% of educational cess to the tax calculated giving you the final income tax payable in the current financial year.

When To Pay Income Tax?

Generally income tax is calculated for a financial year that starts on 1st April and ends on 31st March of the next year. Income accrued during this particular time frame for a particular year becomes eligible for taxations and scrutiny. Additionally, the individuals also become liable to file their income tax returns for the previous financial year. With the Government of India taking initiatives to make the process easier for individuals, they have their own websites where one can analyse the tax payable, tax refunds and other essential status of the taxation process.

TDS and Advance Tax

TDS is applicable for a salaried individual generally. The tax calculated by the in-house income tax calculator computes the actual tax payable and deducts it as a part of the salary. However, this is not the case with business owners. In case you have a savings bank account or a fixed deposit account, the interest accrued becomes liable for TDS. TDS or tax deducted at source makes it easier for the government to collect taxes.  Every bank or financial organisation that deducts TDS is liable to furnish you with a TDS certificate at the end of every financial year.

Advance tax is altogether a different ball-game. The Advance tax is generally a self-assessment by the taxpayer where they calculate the approximate tax amount and make the payment in advance. This exercise has been introduced to reduce the burden of tax payment processes.

 

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