Income Tax Calculator enables taxpayers to determine taxable income and overall tax liability which are available online these days. In addition to this, the income tax calculator evaluates your taxes on the basis of your annual income, applicable tax slab and the deductions that are eligible to claim under section 80C and section 80D. Like every year, the individual who is earning an income from salary is required to compute income tax to be paid to the government on the total income earned during the financial year.
Moreover, any income from salary and any income earned by an individual is taxable. As this month is already a peak time for taxpayers who have started their ITR Filing for the financial year 2018-19, hence income tax calculator will help you to know a complete brief about income tax return for the assessment year 2019-20.
Why it is important to calculate your income tax?
Income Tax calculator helps taxpayers to arrange and plan their financial perquisites in a way so that you can save on taxes in a legal manner. Hence, this is important to follow each step of calculating your taxable income. Meanwhile, income tax calculator is already available in most of the Tax providers website they offer you a platform to calculate your taxable income in a convenient manner.
Step by step guide on how to calculate one’s total taxable income:
As per the income tax provisions, a person can have a total of 5 sources of income such as Income from salary, income from House Property, Income from Business or profession, income from capital gains, income from other sources.
Income From Salary
You can calculate income from salary using the TDS certificate in Form 16 by the employer. Employer issue a Form 16 and Form 12BA annually which states the salary and allowances and value of perquisites provided to the employee during the financial year.
Income From House Property
Individuals who are salaried employees and lives in a rented house/ apartment can claim house rent allowance or HRA to lower tax outgo. The income tax laws have prescribed a method for computing the HRA that can be claimed as an exemption.
Income From Capital Gains
If you have earned a profit or gain from any capital assets such as property, shares, securities etc which is owned by individual classifies under the category of income under the head capital gain.
Income from other sources
Any income not classified under salary, house property, business and profession except income earned from other sources. This income comprises interest income earned from a savings bank account, deposits, etc. lottery income, dividend income, etc.
The objective of income tax calculator-
- Income Tax Calculator is done with the following objectives:
- To claim deductions under section 80C or Section 80U
- To use legal methods for reducing the tax liability
- To reduce the tax liability and pay lower amounts of tax
Therefore, an income tax calculator is a tool that helps the individuals to compute the taxable income and the overall tax liability.