Income Tax Calculator

What is an Income Tax Calculator?

An income tax calculator is an online tool you can use to assess your tax liability as per the relevant tax laws. The income tax calculator considers factors like your income, age, housing loan payments, expenses, and investments to indicate the total tax payable on your income under the new or old tax regime.

Depending on the tax regime, the tax slabs and factors considered will vary. The online tax calculator is free, easy-to-use, and generates error-free results instantly.

How to Use an Income Tax Calculator for FY 2021-22?

To know your tax liability with an income tax calculator, simply enter relevant details in the fields:

1. Select your age bracket
2. Enter your annual income
3. Disclose investments and eligible deductions under Sections like:
   • 80C (ELSS funds, PPF, house loan principal repayment, etc.)
   • 80CCD(1B) (National Pension System)
   • 24B (Home loan interest repayment)
   • 80E (Education loan interest repayment)
   • 80G (donations to charitable institutions)
4. Enter HRA, LTA exemptions

You can enter ‘0’ for fields that are not applicable. Once you go through the steps, you will see your tax payable under the old and new regimes for AY 2021-22 (FY 2020-21).

How Income Tax is Calculated?

Income tax is calculated on your taxable income based on the tax slab applicable. Your taxable income is derived by adding income from all sources (salary, rent, capital gains, etc.) to get your Gross Total Income and subtracting from this the deductions and exemptions you are eligible for. Taxes already paid in the form of TDS or Advance Tax will be considered when calculating income tax.

Calculate Income Tax for the Old regime:

In the old tax regime, you benefit from standard deduction and can claim special allowances and tax exemptions on HRA and LTA to arrive at your income from salary. To this, add income from other sources, such as house property, capital gains, and business/ profession to get your Gross Total Income. Next, you can claim deductions under Sections 80C, 80D, 80TTA, etc., to get your taxable Income.

Your taxable income is taxed at the relevant tax slab rate and cess is added to give you your total tax payment.

Calculate Income Tax for the New regime:

In the new tax regime, you forego most exemptions and deductions, for instance, LTC, HRA, standard deduction, deductions under Sections 80C, 80D, 80E, 80G, and so on. Add income from other sources to your income from salary to get your Gross Total Income.

This is taxed at the concessional tax slab rates and cess is added to give you your total income tax payment.

Income Tax Slabs for New and Old Regime

New Income Tax Slab for FY 2020-21 & AY 2021-22

The income tax slab of the new, optional tax regime are as follows.

Taxable Income	Tax Rates
Up to Rs. 2,50,000	NIL
Rs. 2,50,001 –Rs. 5,00,000	5% of income above Rs. 2.5 lakh + 4% cess on income tax
Rs. 5,00,001 – Rs. 7,50,000	Rs. 12,500 + 10% of total income above Rs. 5 lakh + 4% cess
Rs. 7,50,001 – Rs. 10,00,000	Rs. 37,500 + 15% of total income above Rs. 7.5 lakh + 4% cess
Rs. 10,00,001 – Rs. 12,50,000	Rs. 75,000 + 20% of total income above Rs. 10 lakh + 4% cess
Rs. 12,50,001 – Rs. 15,00,000	Rs. 1,25,000 + 25% of total income above Rs. 12.5 lakh + 4% cess
Above Rs. 15,00,000	Rs. 1,87,500 + 30% of total income above Rs. 15 lakh + 4% cess

Income Tax Slab (Old Regime) for AY 2021-22?

The old regime tax slabs for AY 2021-22 are as follows.

1. For individuals below age 60

Taxable Income	Tax Rates
Up to Rs. 2.5 lakhs	NIL
Rs. 2,50,001 – Rs. 5 lakhs	5% of income above Rs. 2.5 lakh + 4% cess on income tax
Rs. 5,00,001 –Rs. 10 lakhs	Rs. 12,500 + 20% of income above Rs. 5 lakh + 4% cess
Above Rs. 10 lakhs	Rs. 1,12,500 + 30% of income above Rs. 10 lakh + 4% cess

2. For individuals between 60 and 80 years (senior citizens)

Taxable Income	Tax Rates
Up to Rs. 3 lakhs	NIL
Rs. 3,00,001 – Rs. 5 lakhs	5% of income above Rs. 3 lakh + 4% cess on income tax
Rs. 5,00,001 – Rs. 10 lakhs	Rs. 10,500 + 20% of income above Rs. 5 lakh + 4% cess
Above Rs. 10 lakhs	Rs. 1,10,000 + 30% of income above Rs. 10 lakh + 4% cess

3. For individuals aged 80 and above (super-senior citizens)

Taxable Income	Tax Rates
Up to Rs. 5 lakhs	NIL
Rs. 5,00,001 – Rs. 10 lakhs	20% of income above Rs. 5 lakh + 4% cess on income tax
Above Rs. 10 lakhs	Rs. 1,00,000 + 30% of income above Rs. 10 lakh + 4% cess

What are the benefits of filing Income Tax online?

Filing income tax returns online:

1. Is quick and convenient
2. Allows for faster and electronic tax refunds
3. Facilitates a prompt confirmation receipt and real-time status updates
4. Is confidential and secure
5. Is error-free and saves professional costs
6. Helps with VISA processing, getting insurance, and loan applications
7. Serves as an income and address proof
8. Makes it easy to avoid the late penalty
9. Helps you carry forward losses

Does everyone have to file Income Tax?

You must file income tax returns if your Gross Total Income for the financial year exceeds the basic exemption limit. For the old regime, the basic exemption limit is:

• Rs. 2.5 lakh for residents below age 60
• Rs. 3 lakh for senior citizens (between 60 and 80 years)
• Rs. 5 lakh for super-senior citizens (80 years and above)

In the new tax regime, the basic exemption is Rs. 2.5 lakh across all age categories.

Additionally, you must file ITR if you have:

• Deposited more than Rs. 1 crore in current account(s)
• Spent more than Rs. 2 lakh on foreign travel
• Incurred more than Rs. 1 lakh on electricity
• Income in/ assets from/ signing authority in an account in a foreign country
• Gross Total Income more than the exemption limit before claiming relevant capital gains exemptions

As per Union Budget 2021, senior citizens above age 75 are exempt from filing ITR for FY 2021-22 if they have only pension and interest income and the two are deposited/ earned in the same bank.

What are the Eligibility Criteria to file Income Tax?

Any resident citizen with Gross Total Income above the basic exemption limit must file income tax returns. However, if your total income is less than the taxable limit, you can file a NIL return.

Other entities that file ITR in India are:

• Hindu Undivided Family (HUF)
• Associations of Persons (AoPs)
• Local authorities
• Corporate firms
• Charitable/ religious trusts
• Companies
• Artificial juridical persons
• Body of Individuals (BOI)

Depending on the taxpayer, the correct ITR form must be used.

What are the details required for e-filing an Income Tax Return?

For e-filing of income tax return keep the following details and documents ready:

1. PAN, Aadhaar, permanent address
2. Bank account details relevant to the financial year (indicate which account any income tax refund should go to)
3. Form 16 and proofs of interest income, for instance, from FDs
4. Deduction details, pertaining to Section 80C, 80D, and others under Chapter VI-A
5. Proof of tax paid (advance tax, TDS, etc.)

What are the Tax Exemptions available for salaried individuals?

1. Standard deduction (Rs. 50,000)
2. House Rent Allowance (partial or total)
3. Leave Travel Allowance (for domestic travel)
4. Work-related expenses (telephone bills, meal coupons, etc.)
5. Deductions under Section
• 80C, 80CCC, 80CCD(1) (NPS, PPF, ELSS, tuition fees, tax-saver FD)
• 80D (health insurance premiums)
• 80C, 24B, and 80EE/ 80EEA (home loan repayment)
• 80E (education loan interest)
• 80G (contributions to approved charitable organisations)
• 80TTA (savings account interest)
• Other deductions

These exemptions/ deductions apply to the old regime. Under the new regime only very few allowances and deductions are available.

How much income tax you pay on your salary depends on your taxable income and the income tax slab you fall under. Your taxable income is what you get when you subtract the exemptions and deductions from your Gross Total Income, which includes your salary (less HRA, standard deduction, etc., for old regime) and income from other sources.

The tax slab depends on your taxable income and age and is different for the old and new regime.

Under Section 80C, you can claim deductions of up to Rs. 1.5 lakh per financial year. However, there is an additional deduction of up to Rs. 50,000 permitted for deposits made to an NPS account.

The Section 80C deduction applies to investments like EPF, PPF, ELSS, and tax saving FD as well as to LIC premiums, home loan principal repayment and more. The limit of Rs. 1.5 lakh is inclusive of subsections like 80CCC, 80CCD(1), and 80CCD(2).

When repaying a home loan, you can claim:

• Up to Rs. 1.5 lakh per year under Section 80C for principal repayment and stamp duty
• Up to Rs. 2 lakh per year under Section 24B for interest repayment
• Up to Rs. 50,000 annually as an additional interest deduction under Section 80EE
• Up to Rs. 1.5 lakh annually as an additional interest deduction, on home loans taken for affordable housing, under Section 80EEA

You can benefit from either Section 80EE or 80EEA, hence, the maximum deduction you can claim per year is Rs. 5 lakh (Rs. 1.5 lakh + Rs. 2 lakh + Rs. 1.5 lakh). In case of a joint home loan taken by co-owners, each one can claim tax deductions individually, as per their ownership stake.

The maximum tax deduction under Section 24B is Rs. 2 lakh per financial year. This deduction is for home loan interest repayment. However, if you fail to purchase/ acquire the home within a period of 5 years, starting from the end of the financial year in which you took the loan, the maximum deduction limit reduces to Rs. 30,000.

Under the old regime, individuals with taxable income up to Rs. 2.5 lakh are exempt from paying income tax. This exemption limit extends to Rs. 3 lakh for senior citizens and Rs. 5 lakh for super senior citizens. Under the new regime individuals from all age groups are exempt from paying income tax if their taxable income is up to Rs. 2.5 lakh.

However, under both regimes, you can claim a rebate of up to Rs. 12,500 under Section 87A if your taxable income does not exceed Rs. 5 lakh. Hence, no income tax may be paid for taxable incomes up to Rs. 5 lakh.

ITR-V or the Income Tax Return - Verification form is the income tax certificate you get when you file your ITR online without adding a digital signature. ITR is important to the IT Department verifying the authenticity of your e-filing.

You can download a PDF version of ITR-V from the official IT Department website, and after printing and signing it you must send it to CPC Bangalore within 120 days of filing your returns online.

Income tax has no direct effect on your credit score. If you file your ITR, your credit score will not increase. However, your ITR is an important document that can help you get a loan. Once you get a loan, you can make diligent repayment to improve your credit score. So, income tax affects your credit score indirectly.