Compute Your Income Tax through the Income Tax Calculator

Compute Your Income Tax through the Income Tax Calculator

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Income Tax Calculator is an online tool that can help you in calculating tax for the FY 2015-16 AY 2016-17 and FY 2016-17 AY 2017-18. It is designed to align with the Budget 2016 ‘Proposed Changes’. This is a helpful program that can be used by a salaried individual, working professionals, and business owners too. 

The Tax Calculator can help you get an approximate amount that you need to pay as tax on your income for the FY 2015-16 and FY 2016-17. 

That means for FY beginning April 1st, 2015 and ending March 31st, 2016, and FY beginning April 1st, 2016 and ending March 31st, 2017. 

How is the Income Tax Calculator Helpful to you

There are two main reasons for choosing to calculate your income tax through an internet payable tax calculating tool:

  • You get an estimated amount that you will be paying as Income Tax for the financial year. This helps you in your tax saving planning. You can easily work out how much you have to invest to claim the tax deductions.
  • You can use the online tax calculator to arrive at the exact figure of tax to be paid. This can help you in further calculations of TDS or tax refunds to be claimed. 

Types of Online Income Tax Calculators

There are two versions of Income Tax Calculators that are available online. 

One is an online tool where you fill in the necessary information in the columns provided and get an instantly computed amount. This is very easy to use and understand. 

Another is an excel sheet format that can be downloaded and stored on your desktop or PC. This can be used as a ready reckoner where amendments can be made as and when required. 

Excel sheets are helpful in that you don’t need to fill all the information again and again. You can just change the data that needs to be, and the computations will change accordingly. 

Income Tax Calculator

There are three steps that you need to take to arrive at the approximate amount of tax liability owed by you. 

1.  Fill out the Basic Details

First, you need to choose the assessment year for which you wish to calculate the tax for. 

Currently, we are in the FY 2016-17. This denotes the income earned during the period from April 1st, 2016 to March 31at, 2017. 

The assessment year for the same would be considered as 2017-18! 

Next, you need to select your age for the calculator to apply the correct income slabs for you. 

These are categorized as:

  • Below 60,
  • 60 and above and below 80, and
  • 80 and above. 

2.  Details regarding your Income

The first thing you need to fill is your taxable income and then the TDS that has been subtracted from the salary. 

All this information is readily available to your from your employer provided Form 16. 

Next, you fill in any other incomes earned as a result of interest from investments like FDs and TDS deducted on such incomes. 

In case you are living in a residential property you took a home loan for, mention the interest being paid on it. 

In case your home loan bought residential property is occupied by a tenant, add the income received from renting the house as well as the details of the interest paid on the home loan. 

3.  Mention all the applicable Deductions

This would include:

  • Basic deductions accrued under Section 80C.
  • Interest earned on Savings applicable under Section 80TTA.
  • In case there are any Donations to Social Causes, they fall under Section 80G.
  • Premiums paid for Medical Insurance are allowed deductions under Section 80D.
  • Interest paid on an Educational Loan comes under Section 80E. 

This would help you in arriving at your tax figure for the FY you require. 

How Should You be Calculating Tax

The percentage of tax that you need to pay depends on the Income Tax Slab you come under. 

The Income Tax Slabs applicable for FY 2016-17 AY 2017-18 and FY 2015-16 AY 2016-17 are as follows: 

For Individuals Below 60 Years

Income Slab (in INR)

Tax Rate (in %)

Under 250,000

NIL

250,000 - 500,000

10

500,001 - 1,000,000

20

1,000,000 and Above

30

  

For Individuals Above 60 and Below 80 Years

Income Slab (in INR)

Tax Rate (in %)

Under 300,000

NIL

300,000 - 500,000

10

500,001 - 1,000,000

20

1,000,000 and Above

30

  

For Individuals 80 and Above

Income Slab (in INR)

Tax Rate (in %)

Under 300,000

NIL

300,000 - 500,000

NIL

500,001 - 1,000,000

20

1,000,000 and Above

30

 

  • For Income exceeding Rs. 1 Crore there is an applicable Surcharge of 15%.
  • There is 3% Education Cess on the calculated Income Tax.
  • Deductions of maximum Rs. 150,000 under Section 80C are allowed for various tax-saving plans.
  • Additional deduction up to Rs. 50,000 is allowed under Section 80 CCD (1B) for investments made towards NPS.
  • Another deduction of maximum Rs. 50,000 is given for housing loans availed after April 1st, 2016.
  • Individuals whose Net Taxable Income is less than Rs. 500,000 will earn a rebate of Rs. 5,000 under Section 87A of the I-T Act of 1961. This is especially beneficial for those who fall under the income band of Rs. 270,000 and Rs. 500,000. 

How should a Salaried Individual calculate his Taxable Income

Taxable income can be calculated as follows: 

Basic Salary + HRA + Transport Allowance + Special Allowance + any other Allowance

  • Telephone bill and medical reimbursements are exempted from being part of the taxable income.
  • If you are in a rented accommodation and receive HRA for it, you can get deductions on HRA.
  • As per Budget 2015, maximum deduction of Rs. 1,600 p.m or Rs. 19,200 p.a is allowed on transport allowance.
  • Any amount received over and above Rs. 1,600 as transport allowance per month will be considered as part of the taxable income. 

Let us Exemplify the calculation of Income Tax

Suppose, ANIL, 35, receives Rs. 50,000 p.m as his Basic Salary, his HRA is Rs. 24,500 p.m, Transport Allowance is Rs. 8,500 p.m, he gets a Special Allowance of Rs. 4,500 p.m, and his annual LTA is Rs. 19,500. 

ANIL lives in New Delhi and pays a monthly rent of Rs. 20,500. He has submitted actual medical and LTA bills amounting to Rs. 12,500 and Rs. 15,000, respectively. 

Salary Component

          Rs.

Deductions

Taxable Amount (in INR)

Basic Salary

600,000

NIL

600,000

HRA

294,000

186,000

108,000

Transport Allowance

102,000

19,200

82,800

Special Allowance

54,000

NIL

54,000

LTA

19,500

12,500 (actual bills)

7,000

Medical Bills

15,000

15,000 (actual bills)

NIL

Gross Taxable Income

 

 

851,800

 

Income from other sources needs to be added to the Gross Taxable Income calculated by computing the Basic Salary and other salary components, to arrive at the actual taxable income. This would include: 

  • Rental Income received on a self-owned residential property or the interest paid on the housing loan.
  • Capital Gains, which include sale or purchase of residential property or shares.
  • Professional Income received from any professional consultation, business, or freelancing activity.
  • Any other income, which could include interest on bonds, FDs, Savings Account, etc. 

Suppose for ANIL; his savings account interest accrued for the financial year under consideration is Rs. 8,500, interest on FDs come to about Rs. 9,900. 

His tax-saving investments for the FY are as follows:

  • PPF - Rs. 45,000
  • ELSS - Rs. 25,000
  • Life Insurance Premium - Rs. 8,000
  • Premium paid for Medical Insurance - Rs. 12,000 

ANIL can claim the following deductions: 

I-T Sections

Maximum Deductions Allowed (in INR)

Tax Saving Investments and Eligible Expenses (in INR)

Claimed Deductions (in INR)

80 C

150,000

PPF 45,000 + ELSS 25,000 + Life Insurance Premium 8,000 + EPF 72,000 (Rs. 50,000 X 12% X 12)

150,000

80 D

For self 25,000, and for parents 30,000

Medical Insurance Premium 12,000

12,000

80 TTA

10,000

Interest on Savings Account

8,500

 


Calculating Net Taxable Income
 

  1. Salary Income + Income from Other Sources = Gross Taxable Income

Rs. 851,800 + Rs. 18,400 = Rs. 870,200 

  1. Gross Taxable Income - Deductions = Net Taxable Income

Rs. 870,200 - Rs. (150,000 + 12,000 + 8,500) = Rs. 870,200 - Rs. 170,500 = Rs. 699,700 

You may like to Read: How to efile Income Tax


Income Tax calculation for ANIL

Below Rs. 250,000

NIL

0

Rs. 250,000 - Rs. 500,000

10% of Rs. (500,000 - 250,000)

Rs. 25,000

Rs. 500,000 - Rs. 1,000,000

20% of Rs. (699,700 - 500,000)

Rs. 39,940

Above Rs. 1,000,000

30%

0

Education Cess on total tax

3% of Rs. (25,000 + 39,940)

Rs. 1,948.20

Total Payable Income Tax

 

Rs. 66,888.20

 

Therefore, ANIL needs to pay a total of Rs. 66,888.20 as his Income Tax towards the government.

 

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