Whether you are a salaried professional or a freelancer, knowing your taxable income helps you plan better, claim deductions smartly, and avoid any year-end tax surprises.
Taxable income is the portion of your earnings on which you are legally required to pay income tax. It is calculated after subtracting all eligible deductions and exemptions from your gross total income—which includes salary, capital gains, rental income, business profits, and other earnings.
Let us break down how it works, the steps involved, and how you can optimise your tax outgo while growing your wealth.
What is Taxable Income?
Taxable income is what’s left of your total income after subtracting exemptions and deductions allowed under the Income Tax Act. This final figure determines how much tax you owe under the old or new tax regime.
For instance, if you earn Rs. 12 lakh annually and claim deductions under Section 80C and 80D worth Rs. 2 lakh, your taxable income comes down to Rs. 10 lakh.
