Income Tax Calculator - Calculate Your Taxes for FY 2024-25

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Income Tax season can be a stressful time for many people, with the fear of not paying the correct amount of taxes or facing penalties and fines. However, the Income Tax Calculator can help ease some of that stress. In this article, we will explore how to use the Income Tax Calculator for FY 2023-24 to calculate your taxes accurately. With this tool, you can ensure that you are paying the right amount of taxes and avoid any unnecessary hassle. So let's get started!

What is income tax?

Income tax is a direct tax that is levied on the income earned by individuals, businesses, and organisations. The tax is calculated based on the income earned during a financial year, which runs from 1st April to 31st March of the following year. The income tax rate varies based on the income earned, with higher tax rates applicable to higher income earners.

How to determine the taxable income

The taxable income is calculated by deducting the allowable deductions and exemptions from the total income. The deductions are allowed under various sections of the Income Tax Act, such as Section 80C, Section 80D, etc. The exemptions are provided for certain incomes, such as agricultural income, dividends, etc. The total income includes all the income earned by the individual, such as salary, business income, capital gains, etc.

What is an Income Tax Calculator?

An Online Income Tax Calculator is a tool that helps you to evaluate your taxes based on the revenue generated by you for the financial year as announced under the Union Budget. Your income tax can either be deducted from your monthly salary or you can also pay individually through the IT returns online portal maintained by the Central Board of Direct Taxes (CBDT).

The Income Tax Calculator can be used to calculate your taxes based on your net income for the financial year. You can key in the details asked in the calculator and it will show the amount that you owe to the government.

How is income tax calculated?

Calculating your income tax liability can be a complex process. The tax is calculated based on the income earned during a financial year, after adjusting for deductions and exemptions. Here's a step-by-step guide on how to calculate your income tax liability:

Step 1: Determine your taxable income

To determine your taxable income, you must first calculate your gross income, which includes all the income you received throughout the year, including your salary, wages, and any income from other sources. Once you have your gross income, you can subtract any deductions and exemptions to arrive at your taxable income.

Step 2: Determine your tax bracket

Your tax bracket is the rate at which your income is taxed. The tax bracket you fall into depends on your taxable income and filing status.

Step 3: Calculate your tax liability

Once you know your tax bracket, you can calculate your tax liability by multiplying your taxable income by your tax rate. However, the tax code is complex, and there are many deductions that can reduce your tax liability. It's important to consult a tax professional or use a reliable tax calculator to ensure accuracy.

Step 4: File your tax return

Once you have calculated your tax liability, you can file your tax return.

How to Calculate Income Tax of a salaried employee?

Calculating your income tax might be quite taxing! Here are 4 easy steps to calculate your income tax easily:

Step 1: Calculating Your Gross Income

The first step is to start with your total income, this includes various salary components.
Identify tax-exempt allowances such as House Rent Allowance (HRA), transportation and any other special allowances.
Use the least of HRA calculations based on actual rent paid or percentage of basic salary for your deduction. (Metro Cities - 50% of the basic salary & Non-metro Cities - 40% of the basic salary)
Declare income from other sources like capital gains and deposits.
This is your gross taxable income.

Step 2: Calculate Net Taxable Income

Utilize Section 80C for deductions, such as PPF, life insurance, and more.
Take into account Section 80CCD (1) for NPS contributions.
Incorporate Section 80CCD (1B) for extra NPS deductions.
Include Section 80D for deductions related to health insurance premiums.
If applicable, explore Section 80DD for deductions on expenses linked to disabled family members.
For education loans, consider deductions under Section 80E.
Sum up all these deductions to determine your net taxable income.

Step 3: Tax Slab Based on Net Taxable Income

Determine your tax slab based on your net taxable income.
Use existing tax slab rates to calculate the income tax liability.
Consider the applicable tax regime, whether new or old.

Step 4: Calculate Taxes

Calculate your income tax liability based on the determined tax slab.

Step 5: Consolidate Net Taxes

Consider if you qualify for a rebate under Section 87A if your net taxable income is below Rs. 5 lakhs.
Deduct the rebate from the total tax payable.
Account for health and education cess of 4% on the tax calculated.
This gives you the net tax payable.
Using an online income tax calculator simplifies this process and helps in accurate tax calculation. It also aids in identifying tax-saving deductions and reducing tax liabilities.

Applicable tax slabs and rates

The income tax rate varies based on the income earned during the financial year. The government revises the tax slabs and rates every year in the Union budget. Here are the tax slabs under the old regime for the financial year 2023-24.

Income Range	Tax Rate
Up to Rs. 2.5 lakh	Nil
Rs. 2.5 lakh to Rs. 5 lakh	5%
Rs. 5 lakh to Rs. 7.5 lakh	10%
Rs. 7.5 lakh to Rs. 10 lakh	15%
Rs. 10 lakh to Rs. 12.5 lakh	20%
Rs. 12.5 lakh to Rs. 15 lakh	25%
Above Rs. 15 lakh	30%

Here are the tax slabs under the new regime for the financial year 2023-24.

Income Slab	Applicable Tax Rate
Up to Rs 3 lakh	Nil
Above Rs 3 lakh and up to Rs 6 lakh	5%
Above Rs 6 lakh and up to Rs 9 lakh	10%
Above Rs 9 lakh and up to Rs 12 lakh	15%
Above Rs 12 lakh and up to Rs 15 lakh	20%
Above Rs 15 lakh	30%

Income Tax Slab Rates for New and Old Regime

The recent 2023 budget has quite caused a lot of confusion amongst taxpayers. As of now in India, there are two ways to calculate income tax: you can pay tax using the old tax regime or the new tax regime. The choice totally depends on your income, age, and preferences.

We've listed out below the income tax slab rates for individuals below 60 years, senior citizens (60-80 years), and super senior citizens (above 80 years) in both the new and old tax regimes presented in a more compact format:

Individuals (Below 60 years):

Income Range	New Tax Regime	Old Tax Regime
Up to Rs. 2.5 lakh	Exempt	Exempt
Rs. 2.5 - 5 lakh	5% on exceeding Rs. 2.5 lakh	5% on exceeding Rs. 2.5 lakh
Rs. 5 - 10 lakh	20% on exceeding Rs. 5 lakh	Rs. 12,500 + 20% on exceeding Rs. 5 lakh
Above Rs. 10 lakh	30% on exceeding Rs. 10 lakh	Rs. 1,12,500 + 30% on exceeding Rs. 10 lakh

Senior Citizens (60-80 years):

Income Range	New Tax Regime	Old Tax Regime
Up to Rs. 3 lakh	Exempt	Exempt
Rs. 3 - 5 lakh	5% on exceeding Rs. 3 lakh	5% on exceeding Rs. 3 lakh
Rs. 5 - 10 lakh	20% on exceeding Rs. 5 lakh	Rs. 10,000 + 20% on exceeding Rs. 5 lakh
Above Rs. 10 lakh	30% on exceeding Rs. 10 lakh	Rs. 1,10,000 + 30% on exceeding Rs. 10 lakh

Super Senior Citizens (Above 80 years):

Income Range	New Tax Regime	Old Tax Regime
Up to Rs. 5 lakh	Exempt	Exempt
Rs. 5 - 10 lakh	20% on exceeding Rs. 5 lakh	20% on exceeding Rs. 5 lakh
Above Rs. 10 lakh	30% on exceeding Rs. 10 lakh	Rs. 1,00,000 + 30% on exceeding Rs. 10 lakh

Please note that these tax rates are applicable for the assessment year 2024-25 in India and the rates can differ based on your chosen tax regime and age group.

Tax Filing Made Easy Using Income Tax Calculator

By using an Income Tax Calculator for filing your taxes, you save yourself from the headache of manually calculating the complicated process of tax returns. It helps you with assessing your taxable income group, tax slab rates and their deductions with ease.

This tool does more than just give you correct results. It also aids in planning your finances wisely. Simply input the required information into an Online Income Tax Calculator and understand how much you can save on your taxes legally.

What are the Eligibility Criteria to File Income Tax?

Still not sure whether you are eligible to file your income tax? We’ve listed below some of the key eligibility criteria for filing your income tax:

If you are an individual who exceeds the maximum tax exemption limit mentioned above then you are eligible and are required to file your income tax.
If you are below 60 years in the old tax regime, the exemption limit for FY 2023-2024 is Rs 2.5 lakh.
If you are a senior citizen (60 to 80 years) you have an exemption limit of Rs. 3 lakh in the old regime.
Super-senior citizens (80 years and above) are exempt from income tax for income up to Rs. 5 lakh in the old regime.

Factors affecting income tax calculation

The following are the essential factors that affect your income tax calculation.

Income

Your income is the primary factor that determines your tax liability. The higher your income, the higher your tax liability. Your income includes your salary, business profits, and other sources of income, such as rental income, interest income, and capital gains.

Age

Your age plays a crucial role in income tax calculation. The tax exemption limit is different for individuals under 60 years and those above 60 years. Senior citizens and super senior citizens are eligible for higher tax exemptions.

Deductions

Deductions are expenses that can be subtracted from your income to reduce your tax liability. Deductions can be claimed for expenses such as medical insurance, education loan, and donations to charitable organisations.

Investments

Investments in various tax-saving instruments such as Public Provident Fund (PPF), Equity-Linked Savings Scheme (ELSS), and National Pension Scheme (NPS), etc., can also help you reduce your tax liability.

Exemptions on Total Income Tax

Income tax exemptions provide relief to taxpayers. It allows you to reduce your total taxable income. These exemptions are an essential aspect of the tax system, offering various avenues to legally lower one's tax liability. It is important that you explore these avenues properly to reduce your tax liability and increase your savings efficiently.

Tax-saving investments

One of the best ways to reduce your income tax liability is by investing in tax-saving schemes. Here are some of the most popular tax-saving investments.

1. Public Provident Fund (PPF)

This investment plan provides tax-free returns and tax benefits under Section 80C for the long-term. The investment is subject to a lock-in period of 15 years, and the maximum amount that can be invested per year is Rs. 1.5 lakh.

Check out PPF Calculator: https://www.acko.com/calculators/ppf-calculator/

2. Equity-Linked Saving Scheme (ELSS)

This is an investment scheme in which the majority of the funds are invested in stocks, and it provides tax advantages under Section 80C. This scheme has a lock-in period of three years, and you can invest up to Rs. 1.5 lakh per year. ELSS has the potential to offer higher returns than traditional tax-saving investments, but it also involves higher risk.

3. National Pension Scheme (NPS)

NPS is a long-term retirement investment scheme that offers tax benefits under Section 80C and Section 80CCD. The investment has a lock-in period until retirement, and you can invest up to 10% of your salary or Rs. 1.5 lakh per year, whichever is lower. NPS offers the option of choosing between equity, debt, and government securities as investment options.

Check out NPS Calculator: https://www.acko.com/calculators/nps-calculator/

4. Unit Linked Insurance Plan (ULIP)

ULIP is a life insurance cum investment plan that offers tax benefits under Section 80C. The investment has a lock-in period of 5 years, and you can invest up to Rs. 1.5 lakh per year. ULIPs offer the potential for higher returns than traditional insurance plans, but also involve higher risk.

Tax planning strategies

Apart from tax-saving investments, there are other strategies you can use to reduce your income tax liability. Here are some of the most effective tax planning strategies.

1. Claiming deductions

Here are some of the most common deductions available to taxpayers.

Section 80C deductions: Investments in PPF, ELSS, NSC, and other eligible schemes.
Section 80D deductions: Medical insurance premiums paid for self, spouse, and dependent children.
Section 80E deductions: Interest paid on education loan.
Section 24 deductions: Interest paid on home loan.

2. Splitting income

If you have a spouse or children who have lower income than you, you can consider splitting your income with them. This can be done by giving them money or investing in their name, which can reduce your overall tax liability.

3. HRA and LTA

If you receive House Rent Allowance (HRA) or Leave Travel Allowance (LTA) as part of your salary, you can claim tax benefits on these allowances. You can claim HRA for the rent paid, and LTA for the expenses incurred on travel within India.

Frequently Asked Questions (FAQs)

Here are some common questions related to Income Tax Calculator

Is there a fee to use an Income Tax Calculator?

No, most Income Tax Calculators are free to use.

How does an Income Tax Calculator work?

An Income Tax Calculator works by taking into account your income, deductions, and investments to calculate your tax liability. You simply enter your details into the calculator, and it will provide you with an estimate of how much tax you need to pay.

Are there any risks associated with using an Income Tax Calculator in FY 2023-24?

There are no significant risks associated with using an Income Tax Calculator, as long as you use a reputable tool and enter your details correctly. However, it is always a good idea to double-check your calculations with a tax professional.

Are there any limitations to using an Income Tax Calculator?

An Income Tax Calculator can only provide you with an estimate of your tax liability. It cannot take into account any changes in tax laws or exemptions that may apply to your specific situation.

Can I use an Income Tax Calculator to file my tax returns?

No, an Income Tax Calculator is only a tool to help you calculate your tax liability. You will still need to file your tax returns through the appropriate channels.

Is an Income Tax Calculator accurate?

Yes, an Income Tax Calculator is accurate as long as you enter your details correctly. However, it is important to note that it is only an estimate and may not be exact.

What information do I need to use an Income Tax Calculator in FY 2023-24?

You will need to provide details about your income, such as your salary, business income, and capital gains, as well as any deductions and investments you have made in the corresponding financial year.

What are the benefits of using an Income Tax Calculator?

Using an Income Tax Calculator in FY 2023-24 can help you plan your finances better by giving you an estimate of your tax liability. It can also help you identify opportunities to save on taxes by claiming deductions and investing in tax-saving instruments.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.