Income Tax Calculator

Individuals can file taxes either under the old or new tax regimes. They need to calculate their taxes according to regulations and deductions available. For this, one can use an online income tax calculator, a cost-effective alternative to hiring a professional tax consultant and gain a better understanding of your tax liabilities.

Learn the intricacies of using an old and new tax regime calculator, its advantages and how it can simplify your tax planning.

What is Income Tax Calculator

An Income-tax calculator is an online tool that helps to evaluate taxes based on a person’s income, his respective tax slab and tax liability. Individuals falling under the taxable income bracket are liable to pay a specific portion of their net annual income as tax. Income tax can be paid either as tax deducted at source while disbursement of monthly salary, or through the income tax returns portal managed by the Central Board of Direct Taxes (CBDT). The provision for online payment of taxes is to ensure individuals pay their stipulated dues on any earnings generated from other sources.

The IT calculator given on this page is aligned with the updates announced in the Union Budget for FY 2023-24 and AY 2024-25.

How to Use the Online Income Tax Calculator?

Follow the below-given steps to use the Indian Income Tax Calculator:

1. Choose the assessment year for which you want to calculate the tax. For example, if you are looking for FY 2023-24, then the AY would be 2024-25, which you can select from the dropdown menu.
2. In the next field, select your age. As already mentioned, Income tax in India differs based on different age groups.
3. Next, click on the ‘income field’. Provide the details of your gross salary (monthly or yearly salary paid without any deductions). Also, you have to fill in other details like annual income from other sources such as rental income, annual interest paid on home loans for the self-occupied and let-out property.
4. Next, enter the details of various deductions, viz. basic deductions u/s under Section 87A, 80C, 80CCD (1B), 80D, 80G, 80E, 80TTA, 80TTB, 80GG. Also, provide the details of interest on an educational loan and on deposits on the savings account.
5. In the next step, provide the details of HRA exemption such as basic salary, DA, HRA, and total rent paid per annum.
6. Finally, select whether you live in a metro city and hit the calculate button to obtain your tax liability.

Whether you're under the old or new regime, income tax calculator can help you calculate your tax liability for both with just a few clicks.

How to Understand Income Tax Slabs

The Indian Income-tax works on the basis of a slab system and the tax is levied accordingly on individual taxpayers. Slab implies the different tax rates charged for different income ranges. In other words, the more your income, the more tax you have to pay. These slabs of income tax are revised every year during the budget announcement. Again, These slab rates are segregated for different categories of taxpayers. 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 to 80 years of age
• Resident Super senior citizens – more than 80 years of age

How to Calculate the Total Income Tax Liability using the Income Tax Calculator for New Regime and Old Regime

How is income tax calculated is often a commonly asked question. Individuals can determine the total tax expenses through an online income tax calculator. Such tools take into account the following pointers to reflect the actual tax liability of a resident or non-resident Indian at the end of a financial year –

1. Annual income from salary/profits.
2. Income from other sources such as investments, rental income, etc.
3. Tax exemptions applicable, if any.
4. House rent and transport allowance.

Entering accurate data regarding the above-mentioned pointers will demonstrate the total tax liability of individuals. Minus the taxes already paid through TDS, the remaining can be deposited directly online through the official portal Challan 280. If, in any event, the taxes paid exceed the total liability, the difference is reimbursed by the government within 30 days of filing for the same.

Taxpayers who file their return after the due date will have to pay interest under 234A and penalty under section 234F. Hence, remembering the due date of filing income tax returns is indispensable. However, keep in mind that the due date varies according to the category of taxpayers. For instance, if you are a salaried individual, usually you must file your income tax returns by the 31st of July of the assessment year.

Benefits of Income Tax Calculator

Using an online income tax calculator offers you numerous benefits, which are as follows:

• Accuracy

An income tax calculator provides nearly flawless accuracy. The traditional method of calculating taxes on paper often leads to errors. Online tax calculators come with advanced features that automatically detect discrepancies.

They offer a clearer understanding of the tax process, eliminating the chance of human error instantly.

• Speed and Convenience

With an online income tax calculator, you can calculate your taxes anytime, anywhere. It eliminates the need to set aside specific time and place for tax calculations, making the process quick and convenient compared to conventional methods.

• Easy to Use

It is a user-friendly tool that is free to use. You simply enter your financial and personal details to get an accurate estimate of your tax obligations.

• Improves Management of Expenses 

Once you calculate your tax using the IT calculator, you get an idea of your tax payments. This helps you plan your finances in advance, allowing you to manage other financial expenses and requirements. 

• Plan Your Finances in a Better Way

Tax planning can be complex, involving many intricacies. By learning your tax liabilities, you can plan your finances better and invest in tax-saving instruments like mutual funds, fixed deposits, loans, ELSS, and PPF.

This knowledge allows you to maximise tax benefits and make informed investment decisions.

• Data Privacy

Calculating your income tax on paper can expose your financial data to potential fraudsters. Online tax calculators ensure your financial information remains confidential, protecting it from unauthorised access. You can be 100% confident about your data security.

• Understanding Tax Factors

Online income tax calculators also provide educational value, helping you understand factors that affect your taxable income. This knowledge enables you to plan your tax savings effectively and use the correct strategies for saving your money.

Using an old vs new tax regime calculator simplifies your tax planning and helps you manage your finances more efficiently. This tool provides accuracy, convenience and valuable insights, making it an essential part of your financial toolkit.

Thus, start using a tax calculator today to better understand your tax obligations and optimise your tax savings!