An Income Tax Calculator is an easy-to-use online tool that can help individuals calculate taxes on their taxable income. By using an income tax calculator, one can easily organise and prepare one’s financial statement for the current assessment year while making sure to avail the tax benefits. This article will guide individuals on how to calculate income tax online.
How is income tax calculated?
The income tax of a taxpayer is calculated on the basis of his/her taxable income and the applicable tax slab. First, income generated from one or multiple sources is added to get the total income of an individual. Then, the deductions and exemptions for which he/she is eligible are subtracted from the total income to derive the taxable income. Moreover, taxes which are already paid as advance tax or TDS will be taken into consideration while calculating income tax. It is easy to calculate the tax online.
The income tax calculator are easily accessible tools that are free and user-friendly. So, to avoid penalties for not filing their taxes on time, taxpayers should take the help of these calculators to calculate them online.
How to use the income tax calculator?
To know one’s tax liability with the help of an online tax calculator, one has to enter the following relevant details:
Step 1: The first step is to select the age bracket.
Step 2: In the next step, individuals have to enter their annual income
Step 3: Individuals need to enter the details about investments and deductions if any. Some of the sections for tax deduction may include 24B (Home loan interest payment), 80E (Education loan interest repayment) and 80CCD (1B) (National Pension System).
Step 4: In the final step, taxpayers need to enter their LTA and HRA exemptions.
For the fields that are not applicable, individuals can enter ‘0’ in them. Finally, after completing all the steps, individuals can view the amount of tax they need to pay under the old and new regimes for FY 2022-23.
What are the tax exemptions that salaried individuals can get?
Salaried individuals can derive the following tax benefits:
- Standard deduction of Rs. 50000
- Expenses related to work like meal coupons and telephone bills as deductions
- Leave travel allowance for domestic travel
There are other types of deductions under various sections like:
- 80D (health insurance premiums)
- 80E (education loan interest repayment)
- 80TTA (savings account interest), etc.
In addition to these, individuals can also get tax benefits on house rent allowance. Furthermore, individuals looking forward to getting joint home loans with their spouses can enjoy tax benefits on joint home loans.
However, the tax calculator in the new regime has very few deductions and allowances. So, to enjoy the above-mentioned tax benefits, taxpayers should consider opting for the old regime.
Besides providing tax benefits on home loans, the Government of India has introduced new schemes which have made buying a home easier and more affordable. One such scheme is the Pradhan Mantri Awas Yojana. First-time home buyers should check if they are eligible for PMAY scheme so that they can enjoy subsidies on their interest payments.
A few features of the PMAY Yojana are:
- Eligible individuals can enjoy an interest subsidy rate of up to 6.5% on home loans with tenure of up to 20 years.
- Senior citizens and differently-abled people will get the preference of choosing a house on the ground floor if they purchase a home through this scheme.
- One unique feature of this scheme is that the homes that will be constructed under this scheme will be made with eco-friendly technologies.
However, individuals who are not eligible for PMAY and yet want to avail a home loan can contact any financial institution. Other than checking who provides the most affordable interest rates and good services, individuals should also check the pre-approved offers provided by the lender. To check their pre-approved offers, borrowers need to enter their credentials on the website. There are multiple offers available on various secured loans, which help to simplify and accelerate the loan process.