For every salaried individual, income tax saving is an important aspect of financial planning. To create a strong financial plan, it is very important to have a proper understanding of income tax liabilities. With the help of an income tax calculator, an individual can calculate their income tax liability as well as their income tax returns. Further in this article, we have elaborately discussed all that you need to know about the income tax calculator.
What is an Income Tax Calculator?
The income tax calculator is a specifically designed online tool that helps taxpayers with their basic tax computation. With the help of an income tax calculator, an individual can conveniently calculate their income tax liability. Individuals falling under the bracket of taxable income are liable to pay a specific portion of their net annual income as tax. The income tax can be paid either as tax deducted at source while disbursement of monthly salary, or through the income tax return portal managed by the Central Board of Direct Tax (CBDT).
The income tax calculator not only helps to calculate the total taxable income but also helps in tax saving with the following objectives:
- To claim deduction under Section 80C and Section 80U
- To pay a lower amount of tax and reduced tax liability
- To use legal methods for reducing tax liability and not evading tax
- Investing in tax saving instrument that yields good returns
How to Use an Income Tax Calculator Online?
Every year, the taxpayers are required to calculate income tax to be paid to the government on the total income earned during a financial year. The income tax calculator calculates this on the basis of the annual income of an individual and the deductions they are eligible to claim under different sections of the IT Act. Moreover, the income tax calculator also provides the taxpayers with the investment options that suit their financial portfolio and can be a lucrative option for tax-saving investment.
The income tax calculator can be used online free of cost in a simple and hassle-free way. To use the calculator, one just needs to choose the assessment year for which they want to calculate the tax. Apart from this, the taxpayer also needs to enter some other details like age, gender, city, income (which includes gross salary income, annual income from other sources, annual income from interest earned, rental annual income), deductions, viz. basic deduction U/S 80C, Section 87A, 80CCD(1B), 80D, 80G, 80E, 80TTA, 80TTB, 80GG and details of HRA exemption such as basic salary, DA, HRA and total rent paid per annum. After entering all these details, the taxpayer just needs to click on the proceed button to obtain the tax liability.
How to Understand Income Tax Slabs?
The income tax is levied on an individual taxpayer based on the tax slab of the particular financial year and the tax bracket that they fall under. The income tax slab implies different tax rate charges for different income ranges. The taxpayer with a higher income needs to pay more tax. The income tax slab rates are revised every year during the budget announcement. As per the income tax of India, there are three categories of ‘individual taxpayers’ such as:
- Individuals below 60 years of age including residents and non-residents
- Resident senior citizens- 60-80 years of age
- Resident super senior citizens- more than 80 years of age
Income Tax Slab Rates FY 2021-2022
The income tax slab shows the total tax rate payable by taxpayers based on their annual earnings from different sources combined. Let’s take a look at the income tax slab rates for FY 2021-2022 for individuals, HUF, Senior Citizens and NRI.
Income Tax Slab Rates FY 2021-22 for Individuals
| Income Slab (in Rs.) | Income Tax Rate |
| Up to 2,50,000 | NIL |
| 2,50,000- 5,00,000 | 5% of the amount exceeding Rs. 2,50,000 |
| 5,00,000- 10,00,000 | 20% of amount exceeding Rs. 5,00,000 + Rs. 12,500 |
| 1,000,000 & Above | 30% of amount exceeding Rs. 1,000,000 + Rs. 1,12,500 |
Surcharge:
- 10% of income tax where total income exceeds Rs. 50,00,000
- 5% of income tax where total income exceeds Rs. 1,00,00,000
- 25% of income tax where total income exceeds Rs. 2,00,00,000
- 37% of income tax where total income exceeds Rs. 5,00,00,000
*Health and Education Cess :- 4% of income tax and surcharge
Income Tax Rates FY 2021-22 for Hindu Undivided Family (HUF)
| Income Slab (in Rs.) | Income Tax Rate |
| Up to 2,50,000 | NIL |
| 2,50,000- 5,00,000 | 5% of the amount exceeding Rs. 2,50,000 |
| 5,00,000- 10,00,000 | 20% of amount exceeding Rs. 5,00,000 + Rs. 12,500 |
| 1,000,000 & Above | 30% of amount exceeding Rs. 1,000,000 + Rs. 1,12,500 |
Surcharge:
- 10% of income tax where total income exceeds Rs. 50,00,000
- 15% of income tax where total income exceeds Rs. 1,00,00,000
- 25% of income tax where total income exceeds Rs. 2,00,00,000
- 37% of income tax where total income exceeds Rs. 5,00,00,000
*Health and Education Cess:- 4% of income tax and surcharge
Income Tax Slab Rate for FY 2021-22 for NRI
| Income Slab | Income Tax Rate |
| Upto 2,50,000 | NIL |
| 2,50,000- 5,00,000 | 5% of the amount exceeding Rs. 2,50,000 |
| 5,00,000- 7,50,000 | 10% of the amount exceeding Rs. 5,00,000 + Rs. 12,500 |
| 7,50,001- 10,00,000 & | 15% of the amount exceeding Rs. 7,50,000 + Rs. 37,500 |
| 10,00,000 – 1,250,000 | 20% of the amount exceeding Rs. 10,00,000 + Rs. 75,000 |
| 12,50,000-1,500,000 | 25% of the amount exceeding Rs. 12,50,000 + Rs, 1,25,000 |
| 1500,000 & above | 30% of the amount exceeding Rs. 1,500,000 + Rs. 1,87,500 |
Surcharge:
- 10% of income tax where total income exceeds Rs. 50,00,000
- 15% of income tax where total income exceeds Rs. 1,00,00,000
- 25% of income tax where total income exceeds Rs. 2,00,00,000
- 37% of income tax where total income exceeds Rs. 5,00,00,000
*Health and Education Cess:- 4% of income tax and surcharge
Income Tax Slab Rates FY 2021-22 for Senior Citizens (Above 60 years but Below 80 years)
| Income Slab | Income Tax Rate |
| Up to 3,00,000 | NIL |
| 3,00,000- 5,00,000 | 5% of the amount exceeding Rs. 3,00,000 |
| 5,00,000- 10,00,000 | 20% of amount exceeding Rs. 5,00,000 + Rs. 10,000 |
| 1,000,000 & Above | 30% of amount exceeding Rs. 1,000,000 + Rs. 1,10,000 |
Surcharge:
- 10% of income tax where total income exceeds Rs. 50,00,000
- 15% of income tax where total income exceeds Rs. 1,00,00,000
- 25% of income tax where total income exceeds Rs. 2,00,00,000
- 37% of income tax where total income exceeds Rs. 5,00,00,000
*Health and Education Cess:- 4% of income tax and surcharge
Income Tax Slab Rates FY 2021-22 for Senior Citizens (Above 80 Years of Age)
| Income Slab | Income Tax Rate |
| Up to 5,00,000 | NIL |
| 5,00,000- 10,00,000 | 20% of amount exceeding Rs. 5,00,000 |
| 1,000,000 & Above | 30% of amount exceeding Rs. 1,000,000 + Rs. 1,00,000 |
Surcharge:
- 10% of income tax where total income exceeds Rs. 50,00,000
- 15% of income tax where total income exceeds Rs. 1,00,00,000
- 25% of income tax where total income exceeds Rs. 2,00,00,000
- 37% of income tax where total income exceeds Rs. 5,00,00,000
*Health and Education Cess:- 4% of income tax and surcharge
Note- A resident individual is eligible for tax exemption under Section 87A if the total income does not exceed Rs. 5,00,000. The amount of exemption shall be 100% of income tax or Rs.12,500, whichever is less.
List of Exemptions Included in Income Tax Calculation
Section 80C– Exemption up to Rs. 1.5 lakh can be claimed in any tax-saver fixed deposits, national savings certificate, public provident funds, unit-linked insurance plan, an equity-linked savings scheme, life insurance plan and term insurance plan
Section CCD (1B)– Tax exemption up to Rs. 2 lakh for money deposited in the national pension system
Section 87 A– Income tax below Rs. 5 lakh is eligible for tax exemption of up to Rs. 12,500
Section 80D– Up to Rs. 25,000 tax exemption can be claimed on the premium paid towards medical insurance. Senior citizens can claim up to Rs. 50, 000
Section 80G– Any donation made to a charitable organization is entirely exempted from tax calculations
Section 80E– 100% tax rebate can be claimed on interest on education loan for up to 8 years
Section 80 GG– Tax rebate on income spent towards paying house rent (house rent allowance)
Section 80TTA/80 TTB- Interest earned on the savings account is eligible for a tax rebate up to Rs. 10000. Under Section 80 TTB up to Rs. 50,000 can be claimed on the interest earned for the senior citizens
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