• Apply now

  • Recent Search

    Popular Search

    • Account Details

    • Personal Loan

    • Mobile Phone on EMI

    • Pre-Approved Offers

    Suggestions

    Directly Go To

How to calculate your taxable income

Money in bank in 24 hours

Apply now

How to calculate your taxable income

Calculating your taxable income A Simple Guide

  • Highlights

  • Begin by collating your total income

  • See deductions according to various sections of the IT Act

  • Check your tax bracket to compute the amount of tax you need to pay

  • Use the Income and Tax Calculator available online

Income tax calculations can overwhelm you and you may leave it to your chartered accountants to take charge. But, it is important for you to be aware of your finances so that you can take smart decisions that will help your money grow. You too can calculate your taxable income after deducting all the exemptions and deductions that apply to your income amount. The income here doesn’t just include the money you receive from the company you work for. There are other sources the government considers as income as well. Let’s look at these before moving on to how you should calculate how much of it is taxable.

Types of income to calculate

1. Money received as salary
This will include everything that your company gives you: your basic salary, bonuses, travel allowance, dearness allowance, house rent allowance (HRA) and any other component mentioned in your CTC. Once you get a gross amount, deduct your HRA exemptions or any other exemptions along with reimbursements from this.

2. Rental income
If you own property that you have rented out, the monthly income you receive from your tenant is also taxable. To calculate the income received, you will need to compare the rent you receive with the expected rent. You can calculate the expected rent by comparing the fair market value of the property with the municipal value. Between your actual rent and expected rent, whichever amount is higher, becomes your gross annual value (GAV) of the property. Subtract the municipal tax to arrive at the net annual value (NAV) of your property.

3. Capital Gains income
This is the profit you make on selling assets such as shares or property. Divide your profit into long-term capital gains and short-term capital gains before adjusting them with deductions under the relevant sections of the Income Tax Act.

4. Other sources
This will include any income you receive from your investments such as fixed deposits, savings account or even the money made on gambling. To make it simpler, this is income that does not fit under any of the sub-heads mentioned previously.

Tax Benefits on a Home Loan

How to calculate your taxable income

1) Calculate gross income
Once you add up all the money received from the various incomes mentioned above, you arrive at your gross annual income.

2) Calculate your taxable income
Once you know your gross income, you subtract any relevant deductions to be made under the Income Tax Act. This would include the deduction benefits for investing in the Public Provident Fund (PPF), paying for health insurance, etc. Once you get the taxable income, find out which tax bracket your income falls under and then apply the appropriate income tax rate.

To do all this in a more organised fashion, you can use the online Income Tax calculator. Don’t shirk off paying your income tax because it will cause problems for you later. Follow these tips or sit with a chartered accountant and understand ways in which you can legitimately reduce your taxable income.

DISCLAIMER:
The information, products, and services included in or available on bajajfinserv.in may include inaccuracies or typographical errors. Changes are periodically added to the information herein. bajajfinserv.in and/or its respective suppliers / affiliates may make improvements and/or changes on the bajajfinserv.in website at any time.
The material contained in this site and on associated web pages is general information and it is not intended to be advice on any particular matter. Subscribers and users should seek professional advice before acting on the basis of the information contained herein. The decision with respect to any financial product or opportunity or nature or suitability or choice or the viability of any product or service shall always be sole responsibility and decision of the subscriber and user.
Home Loan interest rate

PRODUCT GUIDANCE

Tax Savings Tips for Small Business Owners
Gain Tax Benefits on Your Joint Home Loan

PRODUCT GUIDANCE

Know the tax benefits on a joint home loan

PRODUCT GUIDANCE

Home loan tax exemptions and benefits

How would you rate this article

 Please let us know why?

What did you dislike?

What did you dislike?

What did you like?

What did you like?

What did you like?

Next up

Save money with these 5 tax tips

PRODUCT GUIDANCE

Save money with these 5 tax tips

Subscribe Now

Subscribe Now

Subscribe to our monthly newsletter and get the latest updates

Thank you for subscribing