Income Tax Calculator - Gross Taxable Income, Income Tax Slabs, Exclusions, and Deductions

All individuals and entities in India with a taxable income must pay taxes to the Income Tax Department and file their income tax returns.

The income tax calculator gives you an estimate of tax based on your income. The taxable income is assessed after deductions, other taxes paid, and tax deducted at source. The calculated taxable income is taxed at the applicable slab rate.

Here is a complete guide to the Income Tax Calculator and the tax benefits you can avail of under your health insurance policy.

What is an Income Tax Calculator?

An income tax calculator is an online tool that helps evaluate the taxes based on personal income and respective tax slab. If your income falls in the taxable bracket, you are liable to pay a specific portion of your net annual income as tax. There are multiple ways to pay income tax, such as through Tax Deducted at the Source(TDS) from your monthly salary or via the income tax returns portal managed by the Central Board of Direct Taxes (CBDT).

Using an income tax calculator is very helpful as it easily organizes and prepares our financial statements for the current financial year while taking steps to maximise our tax savings.

How to Use the Online Tax Calculator to Calculate Tax for FY 2024-25?

The online tax calculator calculates the amount of tax payable. It considers various parameters such as your income, age, gender, and other factors to determine the exact tax liability.

Salaried employees can use the online tax calculator to calculate tax.

Follow the steps given below to calculate your income tax for FY 2024-2025:

• Select the financial year for which you want to calculate tax.
• Select your age. The tax liability varies depending on the age group.
• Mention your taxable salary after eliminating different exemptions, such as HRA, standard deduction, etc., if you select the old income tax slabs. Otherwise, you can enter your salary without availing exemptions if you choose the new income tax slab.
• Enter additional income details like rent, interest income, and home loan interest paid.
• If you want to calculate tax under the old income tax slab, make sure you show your investments as per Section 80C, 80D, 80G, 80E, and 80 TTA.
• Click on the calculate option to get tax liability. You will get a comparison of the old and new income tax slabs.

How to Calculate the Total Income Tax Liability using the Income Tax Calculator for New Regime and Old Regime

To calculate the total income tax liability for the FY 2024-2025 using the income tax calculator for both the new and old regimes, follow these steps:

Step 1: Gather Financial Information

• Gross Total Income: Income from salary, business, house property, capital gains, and other sources.
• Deductions/Exemptions: Gather information about applicable deductions (like Section 80C, 80D) and exemptions (like HRA) if you are using the old tax regime.
• Taxable Income: Income after eligible exemptions and deductions.

Step 2: Use an Income Tax Calculator

You can use an online income tax calculator or a spreadsheet tool.

For the Old Regime:

Input Your Income Details:

• Gross income from all sources.
• Exemptions (e.g., HRA, LTA).
• Deductions (e.g., 80C for investments, 80D for medical insurance, etc.).

Calculate Taxable Income: Subtract your deductions and exemptions from gross total income.

Apply Old Regime Tax Slabs: For FY 2024-25, the old regime slabs are:

• ₹0 - ₹2,50,000: No tax.
• ₹2,50,001 - ₹5,00,000: 5%.
• ₹5,00,001 - ₹10,00,000: 20%.
• ₹10,00,001 and above: 30%.

Include Cess: Add 4% health and education cess to your total tax liability.

For the New Regime:

Input Your Income Details: Enter your gross income, as the new regime offers fewer deductions.

Calculate Taxable Income: Subtract the standard deduction of ₹50,000 from gross income (if applicable).

Apply New Regime Tax Slabs: For FY 2024-25, the new regime slabs are:

• ₹0 - ₹3,00,000: No tax.
• ₹3,00,001 - ₹6,00,000: 5%.
• ₹6,00,001 - ₹9,00,000: 10%.
• ₹9,00,001 - ₹12,00,000: 15%.
• ₹12,00,001 - ₹15,00,000: 20%.
• Above ₹15,00,000: 30%.

Include Cess: Add 4% health and education cess to your total tax liability.

Step 3: Compare the Tax Liability

• Review the tax liability calculated under both regimes.
• Choose the regime with the lower tax liability for your financial situation.

Benefits of Income Tax Calculator

Calculating how much income tax you have to pay for a current financial year can sometimes be a hassle and time-consuming. Using an Income tax calculator offers multiple benefits and makes the process easier. Let us discuss some of these benefits in detail:

• Accurate Calculations: An income tax calculator provides accurate and comprehensive information. It has advanced multiple features that automatically detect discrepancies. It also offers a clear understanding of the tax process, reducing the chances of human error.
• Speed and Convenience: You don’t have to set a specific time for all the tax calculations. With the help of the online income tax calculator, we can calculate our taxes anywhere and anytime.
• User-friendly: It is a very easy-to-use tool; you can enter your personal and financial information to get an estimate of your tax obligations.
• Data Privacy: You usually calculate your tax deductions on paper, which can expose this information to potential fraudsters. However, online tax calculators ensure the financial information, protecting it from unauthorised access.

What is Excluded from Gross Total Income?

According to Section 10 of the Income Tax Act, certain income types are not counted under Gross Total Income and are thus tax-exempt.

• Income earned from agriculture.
• Income received as a HUF member.
• Profit earned as a co-owner in a partnership firm.
• Amount obtained from Provident Fund Account or ‘Sukanya Samruddhi’ Account.
• Amount received on voluntary retirement or termination of service, as per any voluntary retirement scheme, up to max. Rs 5 lakh.
• Amount obtained in the form of gratuity received under the Payment of Gratuity Act if it does not exceed the amount calculated as per the provisions of sub-sections (2) and (3) of section 4 of that Act.
• Sum received as an employee from the National Pension Scheme (NPS).

Deductions Applicable on Gross Taxable Income

Income tax deductions help salaried employees save tax. These deductions significantly reduce tax liability. Tax-free expenses incurred during a financial year are subtracted from an individual’s annual income. An individual can claim an income tax deduction on investments made during the previous year while filing their income tax return.

Taxpayers can claim several deductions to reduce their taxable income. Let us discuss some important income tax deductions that taxpayers can claim.

Section 80C Deductions: A maximum deduction of Rs.1,50,000 can be claimed for any contribution towards:

• Payment of Life Insurance policy premium
• Repayment of the principal portion of the home loan
• Payment of Stamp duty or property registration fees
• Public Provident Fund (PPF), Sukanya Samriddhi Yojana, Equity Linked Saving Scheme (ELSS), Five Year Bank Deposit (FD), Senior Citizens Saving Scheme, National Savings Certificate

Section 80D Deductions: Individuals and HUFs who pay premiums for mediclaim policies are eligible for income tax deductions under Section 80D. The maximum deduction for an individual and his family on the health insurance policy is Rs 25,000. If the plan includes senior citizens or the individual is above 60 years of age, then the maximum deduction is Rs. 50,000.

Section 80DD Deductions: Individuals and HUFs on medical treatment or maintenance of a person with a disability are applicable for tax deduction up to the maximum amount of Rs 75,000 and up to Rs 125,000/- for severe disability.

Section 80DDB Deductions: Expenses incurred on medical treatment for specific diseases for self or dependents are eligible for tax deduction up to a maximum amount of Rs 40,000. The limit is Rs 1,00,000 for senior citizens.

Section 80G Deductions: There is a tax deduction of 100% for contributions made towards charitable institutions specified under the I-T Act, for instance, the Prime Minister National Relief Fund or the National Defense Fund. In other cases, there is a deduction of 50%.

Section 80TTA Deductions: There is a deduction of Rs 10,000 on saving interest income.

How to Calculate Gross Taxable Income?

Resident Indians and NRIs with income within the taxable range are required to pay taxes. The income can be obtained from various sources, including:

• Income from salary: Salaried individuals may earn income from Basic Pay, House Rent Allowance (HRA), Transport Allowance, Leave Travel Allowance (LTA), Special Allowance, Other Allowance, phone bills reimbursements, and more. Tax exemptions may apply to certain components like HRA and LTA, and a standard deduction of Rs 50,000 is applicable.
• Income from Residential Property: Rental income from owned property (excluding self-occupied) is taxable.
• Income from Business or Profession: Profits and gains from any business or profession during the previous taxable year.
• Income on Capital Gains: Profits from transfer or sale of any capital asset (property, securities, etc.) are taxable.
• Income from other sources: Revised: Income from Other Sources: Income that does not fall under the previously mentioned categories is classified as income from other sources.

What are the Various Income Tax Slabs?

The income tax is calculated based on an individual’s tax slab, which determines the applicable tax rate. The existing tax regime categorises individual taxpayers into three categories:

• Taxpayers below the age of 60 years
• Senior citizens above the age of 60 years and below 80 years
• Super senior citizens above the age of 80 years

The income tax slab is different for each category of taxpayers. The income tax slabs may change after every budget announcement.

For Resident Individuals whose Age is Below 60 Years

For Resident Individuals whose Age is Between 60 to 80 Years

For Resident Individuals whose Age is above 80 Years

Note: In addition to the tax amount given above, a cess of 4% is also applicable.

An individual taxed under the new tax regime, as announced in Budget 2020-21, will have to forgo certain tax deductions and exemptions. Mentioned below are certain tax deductions that taxpayers must forgo while opting for the new tax regime.

• Leave Travel Allowance
• House Rent Allowance
• Relocation Allowance
• Deductions as per Chapter VI A of the Income Tax Act, 1961 such as Section 80 CCC, Section 80D and 80 TTA

The New income tax slabs for individuals for FY 2024-25

Note: In addition to the tax rate given above, a cess of 4% is also applicable.

In every financial year, most employees are worried as to how they should pay the income tax. The income tax is calculated with the help of an online tax calculator. 

Know How to Calculate Income Tax with the Help of this Example

The annual income is the total basic salary, House Rent Allowance (HRA), special allowance, transport allowance, and any other allowance. If you are getting HRA and live in a rented house, then you can claim an exemption. 

Let us understand the income tax calculation per the income tax slab.

Example:

Rahul is a salaried person who works in an MNC in Gurgaon, India. His salary structure for the financial year 2024-2025 is as mentioned below:

Deductions

Rahul lives in Delhi and pays a monthly rent of Rs 15,000. He also claimed LTA of Rs 10,000.

The HRA exemption he will get is the amount which is the least among the following:

1. HRA amount received from an employer in a year = Rs 1,80,000
2. Actual rent paid in a year – 10% of basic = Rs 1,80,000 – Rs 48,000 = Rs 1,32,000
3. 50% of the basic salary if he lives in metro city = Rs 2,40,000

Total salary = Rs 8, 12,000 per annum

Gross taxable income from salary = Rs 6, 20,000 per annum

Investments

Rahul has invested his money as specified below:

Now, Let’s Calculate his Taxable Income:

Gross Taxable Income in India

Gross Taxable Income = Gross Total Income – Deductions = Rs 4,67,400

How to Calculate Income Tax?

Since Rahul is under 60 years of age, the following income tax slab applies to calculate his income tax.

Cess = 4% of Rs 10,870 = Rs 434.8

Total Income Tax = Rs 10,870 + Rs 434.8 = Rs 11,304.8

Thus, the total tax amount payable by Rahul for the financial year 2024-2025 is Rs 11,304.8. He must file his tax returns for the assessment year 2025-26.

Thus, you can easily find the estimated tax for the financial year you selected using an online tax calculator.

>>Read More: Section 10 Of Income Tax Act - Exemptions & How To Claim It?

Cut to the Chase

An income tax calculator is a powerful tool that simplifies the process of estimating tax liabilities. By understanding key components such as gross taxable income, income tax slabs, exclusions, and deductions, you can take full advantage of the benefits available to you. 

One smart way to do this is to invest in health insurance. The premiums paid for health insurance not only secure your health but also qualify for deductions under section 80 D of the Income Tax Act, helping you reduce your taxable income. 

Disclaimer: The information given above is only for reference. The tax exemptions are subject to the rules and regulations of the Income Tax Act.