A beginner’s guide on the income tax calculator

An income tax calculator is a specially designed online tool to help individuals with tax calculations. The tax calculators provide information related to the income, exemptions, deductions and display income tax liability.

This particular tool provides an overall estimation of individuals’ taxable income once they provide the essential details. With such knowledge at hand, individuals can plan their taxes correctly. Hence, individuals can follow the simple steps of using the income tax calculator FY 2020-21 to determine their payable tax amount.

The process to use the calculator

  1. Individuals need to select their age bracket, and this will figure out the applicable tax band
  2. In the next step, they need to input their annual salary. Individuals can also include all the bonuses and variable components.

The evaluation of income tax in India is based on applying different tax rates to separate income groups. For the calculation of income tax, accurate annual taxable income is estimated based on the Income Tax Act provisions.

The taxation amount primarily falls on the income tax slabs that change from year to year and are separated according to an individual's age, gender, and income. Hence, it is noted, the new tax regime of income tax slab for AY 2021-22 is the same for all categories of individuals.

Income tax rates for senior citizen:

       Individuals do not have to pay tax for annual income of up to Rs.2.50 lakh

       For Rs.2,50,001- Rs.5,00,000 – 5% tax

       For Rs.5,00,001- Rs.7,50,000 – 10% tax

       Rs.7,50,001-10,00,000 – 15% tax

       Rs.10,500,001- Rs.12,50,000 - 20%

       Rs.12,500,001- Rs.15,00,00 – 25%

       Above Rs.15,00,000 – 30%

The income tax rate for a salaried individual:

       Individuals do not have to pay a tax of up to Rs.2,50,000

       For Rs.2,50,001- Rs.5,00,000 – 5%

 

       Rs.5,00,001- Rs.10,00,000 – 20%

       Rs.10,00,000 or above – 30%

Hence, these are the tax rates calculated on the income tax calculator FY 2020-21 based on the tax slab. Also, individuals can avail various tax deductions under different sections mandated by the Income Tax Act, and they are:

        Tax deductions under different sections:

Section 80C – This section offers deductions from investments in PPF, NSC and other instruments. Additionally, up to Rs.1.5 lakh deduction is available on home loan principal repayment.

Section 80CCC – This particular section deducts tax on investment in pension funds of up to Rs.1.5lakh.

Section 24 – One of the significant subtractions under this section is the home loan deduction of up to Rs.2 lakh on interest payment.

Hence, these are the ways of tax savings and benefits offered by home loans and other segments.

Also, another tactic of tax exemption is by claiming a deduction for an under-construction property. A deduction of Rs.1.5 lakh can be claimed towards the principal amount. However, it is to be kept in mind that this exemption benefit can only be availed if the housing loan payments are made in the pre-construction phase. Individuals can calculate the tax by using the online tax calculator and evaluate stamp duty and registration charges for tax exemption.

Hence, to avail of these benefits, individuals can consider some reputed HFCs who extend home loan tax benefits with attractive pre-approved offers to expedite and simplify the loan application process. These offers are available on other financial products besides home loans, such as loan against property and more. One can check their pre-approved offer by inputting their name and contact details.

Nonetheless, individuals can use the income tax calculator FY2020-21 to evaluate the taxable amount and file their tax returns every year.
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