A Comprehensive Guide on Income Tax Calculator
Last Updated on June 11, 2022 by rabiamuzaffar
According to the law, paying income tax in India is mandatory for individuals who cross a specific annual income threshold. This limit is pre-set and decided by the Indian Government and revised every year with the annual budget. However, calculating this can be a tedious and technical process.
An income tax calculator is an online tool that helps individuals to simplify this process of computing tax liabilities. It considers age, income, deductions, and exemptions to determine the total taxes payable.
How to calculate income tax online
One must follow the below-mentioned steps to calculate income tax:
Step 1– Visit the official website of the Income Tax Department and open the income tax calculator. However, it does not require an ITR login
Step 2– Specify the assessment year
Step 3- Select the taxpayer category and input details such as female, senior citizen etc.
Step 4– Enter applicable tax deductions
Step 5– Input details of tax exemptions under Section 80C etc.
Step 6– The calculator then calculates the total amount payable per the new and old regime. But, of course, taxpayers also have the flexibility and alter the values at any time
Step 7– Input details of HRA exemptions and click on calculate
Now that one knows income tax login India is not needed to access this online device, one can quickly check the details of the tax amount payable. Nevertheless, several financial institutions also offer an online income tax calculator, which individuals can use while availing of a home loan.
Leading financial institutions also extend pre-approved offers, which simplify and expedite the loan application process. It is available on various financial products such as home loans, loans against property etc. All borrowers have to do is enter their name and contact details to check their pre-approved offers.
Below are the steps mentioned to use the calculator on a lender’s portal:
Step 1- Visit the official website of the lender
Step 2– Input details such as income, interest earned from investments etc. Select the annual income and put the value in rupees
Step 3– Enter HRA exemption details such as the city of living, rent paid, basic salary etc.
Step 4– Specify deductions
Step 5- Enter details such as rent out property, self-occupied or let-out, and select ‘calculate’
Moreover, individuals who have opted for a home loan would have to pay the lower income tax due to the tax exemptions available. One can claim tax deductions up to Rs. 1.5 lakhs on principal paid under Section 80C. Furthermore, tax benefits are also available on stamp duty and registration charges.
Similarly, under Section 24B, individuals can claim tax exemptions up to Rs. 2 lakhs in a financial year. Moreover, prospective borrowers can avail of tax benefits up to Rs.50,000 on interest payment under Section 80EE.
Benefits of the income tax calculator
An income tax calculator can help simplify one’s tax estimation. It can be used anywhere and free of charge. Underlined are its benefits:
Easy assessment of taxable income
The calculator helps one efficiently evaluate and comprehend the total income that one needs to pay without completing income tax login.
The union budget has given the flexibility to taxpayers to choose between the old and new regimes. It makes it easier for individuals to switch as per their preference. As a result, they can calculate differences between both regimes.
For instance, those who have applied for a joint home loan can avail of 80C, and the calculator will add the tax benefits up to Rs. 2 lakhs. Moreover, it helps individuals compute the tax liability for the financial year. This allows one to plan their finances accordingly.
The Income Tax Act provides various deductions that apply to individuals according to one’s expenses and investments. This tool offers clarity on the applicable deductions one can avail.
It is designed to remove any errors committed during a manual calculation. Users have to enter details such as premiums paid, rent amounts, tuition or school expenses and get the results within minutes. With this, they can make better savings and pay on time.
Read More: Know-How to Get Used Car Loans in Easy Steps?
Thus, an income tax calculator eases calculating tax liabilities and helps individuals manage their finances accordingly. However, to use this tool adequately, one must develop an understanding of the tax slabs.