Income tax is the tax that you, as a salaried individual, are supposed to pay on your income. There are a number of things to consider before you start paying the taxes. You need to make sure you are eligible for it or not. If you meet the eligibility criteria of it, then make sure you use an income tax calculator to find out how much tax you will be paying. Let’s find out more about it.
Income Tax is a tax levied on a person who has been in India for at least 182 days during the last tax year. Either that or the person who has been in India for a minimum of sixty days during the previous tax year & for at least three sixty-five days during the preceding four years will be taxed.
When it comes to calculating your taxes, there are a number of things that you need to keep in mind. There are various tax slabs that determine how much income tax you are required to pay. A tax slab is based on an individual’s age, source of income, amount of income and a few other things. Thus, to know how much income tax is levied on you, make sure you go through the income tax slab.
How to Calculate Taxable Income on your Salary?
It is vital that you gather all the required information to file your ITR before you compute the taxable income on your salary. Once done, you will be required to calculate your total taxable income, followed by your calculation of final tax payable or refundable. You will have to make sure you use the applicable tax rates before you subtract the taxes that you already paid in advance through TDS/TCS from the total due amount. This is how you will be able to calculate your final tax.
As an individual taxpayer, you can derive income through these five sources- Income from business/property, Income from salary, Income from capital gains, Income from house property, and Income from other sources. All thanks to the income tax regulations. Each type of income derived by an individual must fall under one of the categories aforementioned.
The procedure for calculation of your taxable income on the salary is as follows:
- Gather all your salary slips and get the Form 16 for the current fiscal year. Make sure you add every emolument such as your basic salary, TA, HRA, DA on TA, DA, as well as other allowances and reimbursements that are mentioned in Form 16 (Part B) as well as on your salary slips.
- You also need to add the bonus that was received during the financial year for the income that is being evaluated and calculated.
- The total will be your gross salary; from the total, you will be required to deduct the portion that is exempted like Transport Allowance (maximum exemption for it is Rs.19,200/year), House Rent Allowance, Medical reimbursement (maximum exemption for it is Rs.15,000/year), and all other reimbursements only when provided the actual bills of the expenses incurred.
- The final result is your net income from your salary.