Income Tax Calculator

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What do you need to know about Income Tax Calculator?

An income tax calculator is a free virtual tool that simplifies calculating taxes owed under different tax schemes. It considers umpteen factors such as annual salary, rent paid, interest on child education, tuition fees, and other savings to determine an individual's tax liability. This calculator provides a convenient and user-friendly method for anyone to calculate their tax liability easily.

Income Tax Calculator

Income Tax Calculator: Understanding Taxable Income

Taxable income is the gross income used to determine an individual's tax liability for a given year. While certain forms of income may have tax breaks and deductions, all income is taxable. The calculator considers the deductions and exemptions to calculate the taxable income accurately.

Components of Taxable Income

  1. Interest Income: Interest earned on checking and savings accounts, income tax funds, and CDs is taxed as ordinary income.
  2. Short-Term Capital Gains/Losses: Ordinary income is gains or losses from the sale of assets held for less than a year.
  3. Long-Term Capital Gains/Losses: Profits or losses from selling assets held for more than a year are subject to taxation based on the ordinary income marginal tax rate.
  4. Ordinary Dividends: All dividends are classified as ordinary income unless classified as qualified dividends.
  5. Qualified Dividends: These dividends are taxed at lower rates, similar to long-term capital gains.
  6. Passive Incomes: Qualified dividends are taxed at lower rates, similar to long-term capital gains.

Exemptions on Total Income Tax

Certain tax code sections provide exemptions to reduce or eliminate taxable income. Here are some notable exemptions:

  1. Section 87A: A tax credit of up to Rs. 12,500 is available for income under Rs. 5 lakh.
  2. Section 80C: Tax rebate of up to Rs. 1.5 lakh on investments in tax-saver fixed deposits, public provident funds, national savings certificates, unit-linked insurance plans, and equity-linked savings schemes.
  3. Section 80CCD (1B): Tax exemption up to Rs. 2 lakhs for contributions to the pension system.
  4. Section 80D: Up to Rs. 25,000 tax exemption on medical insurance premium bills. For senior citizens, the limit increases to Rs. 50,000.
  5. Section 80G: Donations made to charitable organizations are exempt from tax calculations.
  6. Section 80E: Interest income from savings accounts is eligible for tax waivers up to Rs. 10,000. All forms of waived tax calculations fall under Section 80TTB for senior citizens.
  7. Section 80GG: Tax exemption based on income spent on paying house rent allowance.

The Income Tax Calculator takes into account various factors such as salary, rent, and savings to accurately calculate an individual's tax liability, providing a comprehensive tool for tax planning and financial management.


Q. Does the income tax calculator calculate the TDS on salary?

A. No, the income tax calculator does not calculate TDS. The employer deducts TDS. The income tax calculator only calculates the tax liability for the assessment year.

Q. How do you calculate the tax payable?

A. The tax payable is calculated by applying the income tax slab rate of the net taxable income.

Q. How much tax will be deducted from my salary?

A. The tax will be levied based on the income slab you belong to.

Q. Is the section 80C exemption removed?

A. No, the section 80C exemption is not removed. The claim has been restricted for taxpayers opting for a new regime.

Q. Which part of the salary is taxable?

A. The basic salaries, reimbursement of personal expenses, leave Encashment, and City Compensatory Allowance is taxable without any limits or conditions.