How to Use the Income Tax Calculator
Open Tool & Start UsingMaster Your Tax Planning with the Income Tax Calculator
Understanding how income tax is calculated can help individuals estimate their annual tax liability more accurately. The Income Tax Calculator simplifies this process by letting you compare both the Old and New Tax Regimes based on your inputs. This makes it easier to understand how different income components and deductions affect your taxable income.
Complete Step-by-Step Tutorial
Step 1: Enter Your Annual Income
Begin by entering your total annual income before deductions. This may include multiple earnings:
- For Salaried Individuals: Enter your gross annual salary, including basic pay, allowances, and bonuses.
- For Business Owners/Freelancers: Enter your annual revenue minus eligible business expenses.
- Multiple Income Sources: Include salary, business profits, rent, and other taxable income.
Example: If your annual salary is ā¹9,00,000 and freelance income is ā¹1,00,000, enter ā¹10,00,000.
Step 2: Choose Your Tax Regime
India offers two tax regimes. The calculator provides comparisons to help you understand how each one affects your tax liability.
Old Tax Regime
This regime allows several exemptions and deductions, which may reduce taxable income. Some commonly claimed deductions include:
- Section 80C (up to ā¹1.5 lakh): Investments, insurance, and certain expenses
- Section 80D: Health insurance premiums
- HRA exemption based on rent and salary structure
- Interest on home loan (self-occupied property)
- Standard deduction for salaried taxpayers
Tax Slabs (Old Regime):
- Up to ā¹2.5 lakh: Nil
- ā¹2.5 - ā¹5 lakh: 5%
- ā¹5 - ā¹10 lakh: 20%
- Above ā¹10 lakh: 30%
New Tax Regime
This regime offers simplified tax slabs and fewer deductions. It is the default option from FY 2023ā24 onward.
- Most exemptions and deductions are not applicable
- Includes a standard deduction of ā¹50,000 for salaried individuals
Tax Slabs (New Regime):
- Up to ā¹3 lakh: Nil
- ā¹3 - ā¹6 lakh: 5%
- ā¹6 - ā¹9 lakh: 10%
- ā¹9 - ā¹12 lakh: 15%
- ā¹12 - ā¹15 lakh: 20%
- Above ā¹15 lakh: 30%
Step 3: Add Your Deductions (Old Regime Only)
If you choose the Old Regime, enter applicable deductions such as:
Section 80C Deductions
Includes eligible investments and expenses such as:
- PPF
- EPF
- ELSS
- Life insurance premiums
- Home loan principal
- NSC
- Children's tuition fees
Section 80D (Health Insurance)
Enter health insurance premiums paid for self, family, and parents (as permitted by law).
HRA Exemption
If you receive HRA and live in rented property, enter the required details:
- Actual HRA received
- Rent paid minus 10% of basic salary
- 50% of basic salary (metro) or 40% (non-metro)
The calculator determines the eligible exemption automatically.
Home Loan Interest
Enter interest paid on your home loan as per the allowed limit.
Step 4: Review Your Tax Calculation
The tool presents a breakdown including:
- Gross Total Income
- Total Deductions
- Taxable Income
- Tax Liability based on slab rates
- Health and Education Cess (4%)
- Total Tax Payable
Step 5: Compare Both Regimes
The calculator displays taxes under both regimes, helping users understand the difference between the two based on their inputs.
Real-World Example
Profile: Priya, 32
- Annual Salary: ā¹12,00,000
- HRA: ā¹3,60,000
- Rent: ā¹30,000/month
- 80C: ā¹1,50,000
- Health Insurance: ā¹15,000
- Home Loan Interest: ā¹1,80,000
Old Regime (Illustration):
- Gross Income: ā¹12,00,000
- Taxable Income calculated after deductions
- Tax computed as per slab
New Regime (Illustration):
- Gross Income: ā¹12,00,000
- Standard Deduction: ā¹50,000
- Tax computed as per new regime slabs
Pro Tips for Tax Optimization
- Plan early: Keeping track of income and deductions throughout the year makes tax filing easier.
- Know your eligible deductions: Understanding which deductions apply helps improve accuracy.
- Maintain documentation: Records of investments, rent, and insurance support smoother tax filing.
- Review annually: Income and deductions may change each year.
The Income Tax Calculator is a helpful tool for understanding how different tax inputs influence your estimated tax liability.