Income Tax Calculator
When you see people talking about Income tax, you will see most of them wants to dodge the same to save their income. However, with the appropriate tax planning measures, one can not only reduce their tax burden but also plan their financial future well. What many people do not consider are the benefits of paying income tax at the right time if they are eligible to pay the same. A regular taxpayer gets benefits when it comes to availing loans or any form of credit facility, then for many international travel destinations, Income Tax files of the travellers are compulsory and so forth. That said, income tax calculation may seem hectic, especially for those who are not from financial professions. However, with the advent of the income tax calculator, the amount of tax you need to pay can be easily calculated.
In this article, you will get a detailed idea of the income tax calculator, how it works, and how you can use it for calculating your income tax payable. The article will also cover current tax slabs, deductions available, e-filing details and a lot more. So, you can consider this article as one-stop solution for all your queries related to income tax calculation and filing.
What is an income tax calculator?
To start with, an income tax calculator can be defined as an online tool which is used to calculate the tax liability of an individual. By entering the details like income of the individual, eligible deductions, investments and other details, you can calculate the income tax payable within a few minutes. So, there is no more need to sit with the calculator, pen and paper or even for that matter excel sheet to calculate how much you need to pay as income tax for FY 2022-2023. In this AY 2023-2024, you can easily find out the income tax liability using the income tax calculator.
How to use an income tax calculator for FY 2022-23 (AY 2023-24)?
While using the income tax calculator is super easy, however, you need to be aware of the current tax slabs, and deductions available on your income. The income tax slabs are according to the age of the taxpayers and divided into three categories according. One is for people till the age of 60 years. Then the next category is for people within the age group of 60 years to 80 years and then the third category is for people above the age of 80 years. There is another categorization as well which is the new tax regime and old tax regime. Earlier, there was another categorisation too which was according to gender. Then women used to get a bit more relaxation on their income as the exemption limit was higher for them, however, now both the old regime and new regime tax slabs for women and men are the same.
If you are wondering why you need to know all these details to use the income tax calculator the answer is nothing but to choose the right option as you need to choose whether you want your tax to be computed according to the old regime or new regime, then your age will also affect the tax and thus to use the calculator you need to know these details.
Income tax slab for FY 2022-23
Let’s start with the tax slabs for individuals till the age of 60 years for the financial year 2022 -2023 or Assessment year 2023-2024. Here we will also see the prevailing tax slabs for both the old and new regimes. This will help you also analyse which regime will be suitable for your income level.
For people aged up to 60 years
60 years to 80 years (Senior citizen)
80 years and above (Super Senior Citizen)
| Particulars | Old Regime | New Regime |
|---|---|---|
| Up to Rs. 2.5 lakhs | Exempted | Exempted |
| Rs. 250001 to Rs. 5 lakhs | 5% | 5% |
| Rs. 500001 to Rs. 7.5 lakhs | 20% | 10% |
| Rs. 750001 to Rs. 10 lakhs | 15% | |
| Rs. 1000001 to Rs. 12.5 lakhs | 30% | 20% |
| Rs. 1250001 to Rs. 15 lakhs | 25% | |
| Above Rs. 15 lakhs | 30% |
So, as you can see in the above table, the income tax rates under the old regime are only 3 which is 5% for taxable income between Rs. 250001 to Rs. 5 lakhs is 5% and then 20% for income between Rs. 500001 to Rs. 10 lakhs and then above Rs. 10 lakhs it is 30%. While under the new tax regime, there is more segregation.
So, from the above two tables, it is pretty clear, that under the new regime of income tax, there is no special provision for senior and super-senior citizens. While the old regime offers a high exemption limit for senior and super-senior citizens.
*Update *New Tax Slabs for New Tax Regime effective from 1st of April, 2023
The Union Budget for 2023-24 was presented on the 1st of February. While the above-mentioned old tax regime is still the same, there are changes in the new tax regime.
As per the new tax regime, the slabs are as follows –
The updated new tax regime is now the default tax regime, however, if you want to avail of the deductions, then you have to go by the old tax regime only.
Standard Deductions & Tax exemptions as per the updated new tax regime
The standard deduction available under the updated new tax regime is Rs. 50000 up to an annual income of Rs. 15 lakhs, however, if the income is above Rs. 15 lakhs, then the assessee will get a standard deduction of Rs. 52500 instead of Rs. 50000.
Under this updated new tax regime, the tax exemption has also been hiked from Rs. 5 lakhs to Rs. 7 lakhs. As per section 87A, if the income of the assessee is less than equal to Rs. 7 lakhs, then the tax paid by them will be refunded and only people having income above Rs. 7 lakhs have to pay taxes as per tax slabs.
One thing to remember here is that this tax exemption is only available if you are opting for the new tax regime. It is not available under the old tax regime. So, if you are opting for the old tax regime, then if your income is above Rs. 5 lakhs, then you cannot avail of tax exemption under section 87A.
Types of Taxable income in India
Income tax is levied on individuals, corporations, trusts, HUFs and others. The sources of income for these taxpayers are varied and thus taxable income in India is calculated considering five broad heads of income which are -
Income from salary or pension
The taxable income takes into account the basic salary, allowances and any other profit made from the salary that an individual received. Pension is also included under this head of income as that is an extension of salary after the retirement of the employee. This is one of the most important heads of income when it comes to income tax computation.
Income from business
For individuals who are into business or self-employed professionals, the income they generate from their profession has to be included in income from the business head. The incomes which need to be included are profits earned from selling certain licenses, profits made from business in a certain financial year, any profit that an individual makes on his income from the business, any monetary benefits that the business receives from that individual, any cash received under any government scheme for export from the business, and any profit share, salary, bonuses received as a partner in any business firm.
Income from house property
If you have any property which you have rented out and earn rental income from the same, then that income would be included under your income for tax calculation. Under this here, both commercial and residential properties are considered and if you have more than one self-occupied property, then except for one, all others will be taken into consideration for rental income computation, if they have been rented out.
Income from capital gains
The fourth head of income which you need to take into account for calculating taxable income for FY 2022-2023 is any profit that you have generated by selling or transferring any asset which was held as an investment like stocks, bonds, or properties, gold or other.
Income from other sources
Apart from the above-mentioned four heads of income, if you have any other income then according to section 53 (2) of the IT Act, those income needs to be taken into consideration under this category. It usually includes any income generated from gambling, bank deposits, sports rewards, lottery or card games, and others.
Income Tax Deductions
Talking about income tax deductions, there is an entire list of seventy-plus deductions that are available for income taxpayers. While some of these deductions are specific for a certain type of income taxpayer like a salaried individual, or business professional, then the others are for all assessees. The most important deductions which can help you save your taxes as well as help build a secure financial future include the deductions available under section 80. Let’s see the most important deductions available under section 80 –
- 80 C : As per this section of the IT Act, if you have invested in investment vehicles such as LIC, PPF, EPF, ELSS, NSC, ULIP and other investment vehicles of similar nature.
- 80 CCC : Under this section, if you are paying any amount for annuity pension plans then that is deductible from your income.
- 80 CCD (1) : If you pay towards NPS then that amount will be eligible for deduction. However, the maximum deduction can be the least of the following –
- 20% of the gross salary received by self-employed
- 10% of the gross salary received by a salaried employee
- Total deduction allowed under section 80 C/CCC/ CCD - Rs. 1.5 lakh
Important: Here the three sections mentioned above, that are 80 C, 80 CCC and 80 CCD (1) have a maximum deduction limit of Rs. 1.5 lakhs combining three sections. This means if you exhaust the limit of Rs. 1.5 lakhs for investments under section 80 C, then even if you are eligible for 80 CCC or 80 CCD(1), you cannot deduct those amounts from your income.
- 80 CCD (1B): If you deposited any amount into the National Pension Scheme account then you are eligible for an additional deduction of a maximum of Rs. 50000 under this section. This is a newly-added subsection to the IT Act.
- 80 D : Under this section, you can be eligible for a deduction for the amount you pay towards any health insurance scheme of your spouse, dependent children and yourself. You can get up to Rs. 25000 deductions under this section. If you have parents for whom you have also taken an insurance policy then you can get an additional Rs. 25000 deduction (maximum). In case the assessee is a senior citizen, then the maximum amount eligible for deduction becomes Rs. 50000. Also, under this section, you can get a deduction of Rs. 50000 for senior citizens only if you haven’t paid for any health insurance premium for them. The total deduction that you can claim under this section is Rs. 1 lakh.
- 80 EE : Under this section, you can claim a deduction for the interest amount paid on your home loan or any loan availed for acquiring a residential property. The maximum allowable deduction is Rs. 50000.
- 80 EEA : In case, you have availed a loan for acquiring residential property but are not eligible for an 80 EE deduction, then under this section, you can claim a deduction up to Rs. 1.5 lakhs on the interest payable on the loan.
- 80 G : If you have donated any amount to any registered charitable organisation, then you can get 100% or 50% of the amount donated as a deduction from your income.
- Standard Deduction for a salaried individual : If you are a salaried employee or a pension holder, then will get a standard deduction of Rs. 50000 on your total income.
- Standard deduction for rental income : There is another standard deduction of 30% which applies to the rental income you generate.
- Section 24 : While sections 80 EE and 80 EEA offer deduction on interest payable on the home loan, that is only after exhausting the limit of Rs. 2 lakhs under this section 24. If you have a self-occupied property for which you are paying interest on the home loan, then up to Rs. 2 lakhs every year you can claim as a deduction.
For more deductions and exemptions, you can refer to our article on Income Tax deductions.
Income tax calculation for FY 2022-23
So, now you know which income you need to add and the deductions you can avail of, so now let’s see how to calculate income tax. We will here calculate tax payable under both the old income tax regime and the new income tax regime. To calculate the income tax, let’s take an example.
Supposedly, you are employed with ABC organisation and draw a salary of Rs. 15 lakhs per annum. You have invested in an ELSS plan where you have a monthly SIP of Rs. 5000. You also have a health insurance plan for your family which includes your spouse, dependent child and self. For this insurance, you pay a premium of Rs. 30000 semi-annually. You have recently purchased a flat for which you have taken a home loan and the total interest paid during FY 2022-2023 towards this loan is Rs. 125000. You have another house from which you get a rental income of Rs. 10000 every month.
Health & Education cess
After you derive the tax payable amount, you need to add a 4% Health & Education cess on the same.
Now, let’s first calculate the taxable income under both the tax regime
| Particulars | Old Regime (Rs.) | New Regime (Rs.) |
|---|---|---|
| Total Income {(10000*12)-[30%*(10000*12)]} + 15 lakhs | 1584000 | 1584000 |
| Deduction under section 80 C – ELSS investment of Rs. 5000 *12 months = Rs. 60000 | 60000 | NA |
| Deduction under section 80 D – insurance premium paid for family and self Rs. 30000 twice in a year | 25000 | NA |
| Deduction under section 24 – interest amount paid on home loan | 125000 | NA |
| Total Deduction | 210000 | NA |
| Standard deduction | 50000 | 50000 |
| Taxable income | Rs.1324000 | Rs.1534000 |
So, as you can see in the table above, under the old income tax regime, you will be eligible for the deductions while if you opt for the new tax regime, then you will not be able to use the deductions. That said, it doesn’t mean that the new income tax regime is not worthy enough. If you fall into the higher tax bracket, then this regime can be helpful. However, the standard deduction is applicable for both old and new income tax regimes.
So, now we have got the taxable income, let’s see the tax payable under both tax regimes on this amount
| Particulars | Old Regime | Tax Payable | New Regime | Tax Payable |
|---|---|---|---|---|
| Up to Rs. 2.5 lakhs | Exempted | 0 | Exempted | 0 |
| Rs. 250001 to Rs. 5 lakhs | 5% | 12500 | 5% | 12500 |
| Rs. 500001 to Rs. 7.5 lakhs | 20% | 100000 | 10% | 25000 |
| Rs. 750001 to Rs. 10 lakhs | 15% | 37500 | ||
| Rs. 1000001 to Rs. 12.5 lakhs | 30% | 97200 | 20% | 50000 |
| Rs. 1250001 to Rs. 15 lakhs | 25% | 62500 | ||
| Above Rs. 15 lakhs | 30% | 10200 | ||
| Net Tax payable | 209700 | 197700 | ||
| Health & Education Cess | 4% | 8388 | 4% | 7908 |
| Total Tax payable | 218088 | 205608 |
As you can see, the total tax payable under the section old tax regime is Rs. 218088 while under the new tax regime, it is Rs. 205608 even without any deductions apart from the standard deductions. Thus, if you fall under the higher tax bracket, it is wise to opt for the new tax regime while people who have an annual income below Rs. 12 lakhs, should opt for the older one provided they are eligible for deductions.
How to use the income tax calculator?
As you can see above, calculating income tax payable is quite a job, but with the help of an income tax calculator, you can easily find out all these details within a few seconds. All you need to do to use the income tax calculator FY 2022-2023 is to follow these steps –
- First, open the income tax calculator online.
- Then you will find all the segments where you need to fill the amount.
- Start with the income section, and enter the income that you have under the different heads. For instance, if you take the above example, then you need to fill in the income from salary and income from house property. The calculator itself will calculate the standard deductions unlike in the above table, where manually we had to do it. Calculating tax manually is very hectic and time taking.
- Then you need to fill in the deductions. In this section of the calculator, you will find the sections of the income tax act according to which you need to enter the deductions. If you go by the above example, then you need to enter Rs. 60000 under the 80C section where ELSS investment or mutual fund investment is mentioned. Then you need to enter section 80 D deduction for the insurance premium paid and then the interest paid on the home loan. The calculator will figure out the maximum deduction available under each of these sections. So, even if you enter the entire amount of premium or investment made in a year or any such figure, the calculator will take the maximum allowable deduction amount.
- Once income and deductions are entered, you can see the total taxable income and the total tax payable. It will automatically calculate and add the health and education cess.
If you wish to file your income tax return by yourself, then using an income tax calculator is inevitable if you want to save time and derive the right tax payable amount. After calculating the amount of tax to be paid using these online calculators, you can opt for e-filing your tax return. The next section of the article will help you understand how you can easily file your income tax online.
Income Tax E-filing
What is e-filing of income tax?
What are the steps for e-filing an income tax return?
The following are the steps which you need to follow for filing your income tax return online –
- Firstly, you need to register on the ITR portal using your PAN number, date of birth and name. You need to create your user id and password for the site.
- The next step is to select the ITR form which applies to you as a taxpayer. You need to choose
- ITR 1 if you have income from salary, single house property, other sources (interest on bank deposits and other) and the total income is less than equal to Rs. 50 lakhs in the financial year 2022-2023.
- ITR 3 for having income from proprietary business and profession
- ITR 4 is for income from business and profession which can be pre-assumed. This is also known as the Sugam form.
- Now, you need to fill out the form. You can do it online or offline as well. If you fill it offline by downloading it, then you need to upload the form once it is filled.
- After uploading or submitting the form, you will get an acknowledgement receipt which will be the ITR V. You need to update your AADHAAR details on the website. You also need to update bank details and pre-validate the same and complete the acknowledgement process of the ITR.
- If you are eligible for any tax refund, you will receive the same within 120 days from the date of acknowledging the return.
The documents you would need to file the income tax return are –
- PAN
- AADHAAR which is linked to the PAN provided
- Bank account details are validated beforehand
- Salary slips
- Rent receipts for availing of HRA benefit
- Form 16
- Certificates of mutual funds, LIC and other investments and insurance for claiming deductions under section 80, if applicable.
What are the benefits of filing income tax online?
Filing your income tax return online comes with multiple benefits. It saves –
- Time as you do not have to physically visit the ITR department and stand in long queues to file the return anymore.
- The money that you otherwise would have to pay for transport, papers, photocopies, and others. However, it can save the most important cost which is of hiring a CA.
- Filing ITR returns online also helps in getting the tax refund easily and on time.
- With the help of an income tax calculator you can calculate the amount you need to pay, then accordingly fill out the form and submit.
What are the eligibility criteria to file income tax?
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Income Tax Calculator FAQs
Does everyone have to file income tax?
While filing an income tax return is compulsory for anyone, if you are liable to pay income tax but you do not file your return, then you may face legal action from the IT department. Moreover, it will affect your financial standing too.
Can I use income tax calculator for income from capital gains?
Yes, you can use the income tax calculator for calculating taxable income and tax payable irrespective of the income heads.
How can I calculate income tax payable?
Open the income tax calculator you want to use and then enter the incomes under the different income heads which you have. Then enter the investments, insurance premiums, and other deductions for which you are eligible. Then the income tax calculator will provide the tax payable amount as the result.
Disclaimer
*For 30 Year Old Male, , Endowment Plan Option, online purchase of policy excluding underwriting extra premium & GST.