Making a payment for our income tax liabilities is easy, but knowing the different deductions we can get in a year and calculating the final tax liability is quite difficult when there are so many sections and different tax slabs or regimes. In this article, we’ll let you know how an income tax calculator can make your life easy with in-built features which give you a result in just a few seconds.
Steps to follow while using an income tax calculator
- Search income tax calculator and visit the website and start with providing your basic details such as name, address, and PAN card details.
- Select the financial year or assessment year for which you want to calculate the tax liability.
- Select your age category whether you are below 60 or above 60.
- Provide the details of your income such as gross salary income, annual income from other sources, annual income from interest, annual income from let-out house property (rental income), annual interest paid on home loan (self-occupied), and annual interest paid on home loan (let-out).
- Provide the amount of deduction such as basic deductions u/s 80C ( having a limit of ₹1.5 lakhs in various schemes such as ELSS, PPF, ULIP, etc.), contribution to NPS u/s 80CCD(1B), medical insurance premium u/s 80D, a donation to charity u/s 80G, interest on educational loan u/s 80E, and interest on deposits in saving account u/s 80TTA/TTB.
- Provide the details of HRA exemption which includes basic salary received per annum, HRA received per annum, and total rent paid per annum.
- Select the answer to the question “Do you live in a metro city?” and click calculate.
- The income tax calculator will return the tax liability in different tax regimes such as in the old regime, the new regime in FY 2022-23, and the new regime in FY 2023-24. With these values, you can know which tax regime is best for you and in which you have to pay the lesser tax amount.
Let’s see the steps of using an income tax calculator with an example:
- The assessment year is FY 2023-24 and the age category is below 60.
- The gross salary income is ₹10 lakhs, and the annual income from other sources is ₹20 thousand.
- The basic deductions u/s 80C is ₹1.5 lakhs and there is no HRA exemption.
- The answer to the question “Do you live in a metro city?” is yes and click calculate.
- The income tax calculator will return the tax liability in different tax regimes which are as follows:
- The tax liability under the old regime is ₹79,560
- The tax liability in the new regime of FY 2022-23 is ₹73,320.
- The tax liability in the new regime of FY 2023-24 is ₹57,720.
Therefore, you will have to pay a lesser tax amount under the new regimes announced for FY 2023-24. For using an income tax calculator, you do not need to have knowledge of the different tax slabs and tax regimes.
Conclusion
With so many income taxation rules changing every year, it will be difficult for a normal individual to keep track of these changes who don't have the time. But with the usage of an income tax calculator, it is very simple to keep track of all our tax liabilities.
