Save tax up to ₹75,000 ~ u/s 80D.
All individuals and entities in India having a taxable income is required to pay taxes to the Income Tax Department and file their income tax returns.
If you are looking for financial savings, opting for a health insurance policy is a wise idea. Buying a health insurance policy is vital as medical inflation has created a financial burden on families. Getting a tax deduction under Section 80D of the Income Tax Act, 1961, is one of the advantages of buying a health insurance policy.
Tax is paid depending on the current income tax slab under which the person falls. One can estimate the tax to be paid through manual calculation or by using an income tax calculator - an online tool.
The income tax calculator gives you an estimate of tax that depends on your income. The taxable income is assessed after making deductions, other taxes that you may have 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 mediclaim policy.
The online tax calculator calculates the amount of tax that is payable by you. It considers different parameters such as your income, age, gender, and other factors that give a definite amount of tax that has to be paid.
Salaried employees can calculate their income tax with the help of an online tax calculator.
How to Calculate the Gross Taxable Income?
If you are a resident Indian or an NRI, you are required to pay taxes if your income falls within the taxable range. The income can be obtained from various sources, as mentioned below:
Thus, ‘gross total income’ is the amount obtained by adding up all the income earned under the heads of income as specified above.
Taxpayers have the option to choose the old income tax slab or the new tax slab, which was introduced in the Union Budget 2020. In both the tax regimes, individuals who have net taxable income up to Rs 5 lakh are eligible for a rebate up to Rs 12,500.
For those following the old income tax slab, the taxable income is achieved after making income tax deductions. If you have opted for a health insurance policy, you will get deductions on the premium paid as per Section 80D of Income Tax Act for yourself and your family.
According to Section 10 of the Income Tax Act, certain income types are not counted under Gross Total Income and thus are tax exempted.
Few of them are given below:
Income tax deductions help salaried employees in saving tax. These deductions help in reducing tax liability to a great extent. The tax-free expenses incurred during a financial year are subtracted from an individual’s annual income. The income tax deduction can be claimed by an individual on investments made during the last year at the time of filing the income tax return.
An individual taxpayer can apply for several deductions on their income to reduce their taxable income. Let us discuss some of the important income tax deductions that a taxpayer can claim.
Thus, the Net Taxable Income = (Gross Total Income – Deductions)
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The income tax is imposed on an individual as per the income tax slab, where the different tax rates are prescribed for various income tax slabs. As per the existing tax regime, there are three categories of individual taxpayers:
The income tax slab is different for each category of taxpayers. The income tax slabs may change after every budget announcement.
As per the Union Budget 2019, the income tax slab, and rates applicable for tax-paying persons including individuals, Body of Individuals, Hindu Undivided Family (HUF) and Association of People are given below:
Income Range | New Income Tax Slabs |
---|---|
Up to Rs 2.5 Lakh |
Nil |
Rs 2,50,000 to Rs 5,00,000 |
5% above Rs 2,50,000 |
Rs 5,00,001 to Rs 7,50,000 |
Rs 12,500 + 10% above Rs 5,00,000 |
Rs 7,50,001 and Rs 10,00,000 |
Rs 37,500 + 15% above Rs 7,50,000 |
Rs 10,00,001 and Rs 12,50,000 |
Rs 75,000 + 20% above Rs 10,00,000 |
Rs 12,50,001 and Rs 15,00,000 |
Rs 1,25,000 + 25% above Rs 12,50,000 |
Rs 15,00,000+ |
Rs 1,87,000 + 30% above Rs 15,00,000 |
Income Range | Tax Rates |
---|---|
Up to Rs 3 Lakh |
Nil |
Rs 3,00,001 to Rs 5,00,000 |
5% of total income which exceeds Rs 3,00,001 |
Rs 5,00,001 to Rs 10,00,000 |
Rs 10,000 + 20% of total income which exceeds Rs 5,00,000 |
Rs 10,00,001 and above |
Rs 1,10,000 + 30% of total income which exceeds Rs 10,00,000 |
Income Range | Tax Rates |
---|---|
Up to Rs 5 Lakh |
Nil |
Rs 5,00,001 to Rs 10,00,000 |
20% of total income which exceeds Rs 5,00,000 |
Rs 10,00,001 and above |
Rs 1,00,000 + 30% of total income which exceeds Rs 10,00,000 |
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.
Income Range | Applicable Tax Rate |
Up to Rs.2.5 Lakh | Nil |
Rs.2,50,001 to Rs.5,00,000 | 5% above Rs.2.5 lakh |
Rs.5,00,001 to Rs.7,50,000 | Rs 12,500 + 10% above Rs.5 lakh |
Rs.7,50,001 to Rs.10,00,000 | Rs 37,500 + 15% above Rs.7.5 lakh |
Rs.10,00,001 to Rs.12,50,000 | Rs 75,000 + 20% above Rs.10 lakh |
Rs.12,50,001 to Rs.15,00,000 | Rs 1,25,000 + 25% above Rs.12.5 lakh |
Income exceeding Rs.15,00,001 | Rs 1,87,000 + 30% above Rs.15 lakh |
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.
The annual income is the total of 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 on it.
Let us understand the calculation of income tax as 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 2022-2023 is as mentioned below:
Components | Salary per Month | Salary per Annum | Deductions | Taxable |
---|---|---|---|---|
Basic Salary |
Rs 40,000 |
Rs 4,80,000 |
- |
Rs 4,80,000 |
HRA |
Rs 15,000 |
Rs 1,80,000 |
- |
Rs 48,000 |
Special Allowance |
Rs 11,000 |
Rs 1,32,000 |
Rs 1,32,000 |
- |
LTA |
- |
Rs 20,000 |
Rs 10,000 |
Rs 10,000 |
Standard Deduction |
- |
- |
Rs 50,000 |
- |
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:
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:
Category |
Investments |
Amount |
Deductions claimed |
Section 80D |
Premium paid for mediclaim policy |
Rs 12,000 |
Rs 12,000 |
Section 80C |
Premium paid for LIC policy |
Rs 8,000 |
Rs 1,40,600 |
PPF |
Rs 60,000 |
||
ELSS |
Rs 15,000 |
||
EPF contribution deducted by the employer |
(Rs 40,000 * 12%) * 12 = 57,600 |
||
Section 80TTA |
Interest from the savings account |
Rs 8,500 |
Rs 8,500 |
Now, Let’s Calculate his Taxable Income:
Nature of income | Amount |
---|---|
Salary |
Rs 6,20,000 |
Income from Other Sources |
Rs 8,500 |
Gross Total Income |
Rs 6,28,500 |
Deductions | Amount |
---|---|
80C |
Rs 1,40,600 |
80D |
Rs 12,000 |
80TTA |
Rs 8,500 |
Gross Taxable Income = Gross Total Income – Deductions = Rs 4,67,400
Since Rahul is below 60 years of age, the following income tax slab is applicable for calculation of his income tax.
Income Range | Tax Rates | Total |
---|---|---|
Up to Rs 2.5 Lakh |
Nil |
0 |
Rs 2,50,001 to Rs 5,00,000 |
5% of (Rs 4,67,400 less Rs 2,50,000) |
Rs 10,870 |
Rs 5,00,001 to Rs 10,00,000 |
Rs 12,500 + 20% of total income which exceeds Rs 5,00,000 |
0 |
Rs 10,00,001 and above |
Rs 1,12,500 + 30% of total income which exceeds Rs 10,00,000 |
0 |
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 2021-2022 is Rs 11,304.8. He must file his tax returns for the assessment year 2022-23.
Thus, you can easily find out the estimated tax for the financial year you have selected using an online tax calculator.
The amount of tax payable will depend on the individual's annual income and the tax slab chosen. There are different tax slabs applicable for resident individuals below 60 years, senior citizens, and super senior citizens.
To calculate income tax for the financial year 2022-23, individual taxpayers can opt for either the new concessional tax regime or the old tax regime. However, if one chooses the new tax regime, they have to forgo certain deductions and exemptions. However, they can still claim the deduction under Section 80CCD (2). This benefit is applicable when an employer makes contributions (not exceeding 10% of the salary) to a salaried person’s Tier-1 NPS account. To calculate the net taxable income, you need to consider the basic tax exemption limit of up to Rs 2.5 lakh for individuals in both the new and old tax regimes.
The income tax slab rates are decided or changed as per government regulations. If the government decides to revise the tax slabs for the financial year, it is proposed in the upcoming Union Budget and presented in the Parliament.
Individuals can choose either the old tax regime that allows deductions and tax exemptions or the new tax regime without deductions and tax exemptions. An individual choosing the new tax regime for a financial year must fill out a new form called Form 10-IE when filing I-T returns for the relevant financial year.
Yes, different slab rates are prescribed for various categories and income ranges. The tax rates vary for individual taxpayers below the age of 60, senior citizens between 60 and 80, and super senior citizens above 80 years of age. Moreover, the tax rates are different for entities, including companies, partnership firms and LLPs, local authorities, etc.
An employer deducts the TDS (tax deducted at source) from an individual’s income at the rate specified by the tax department and deposits with the government. Before calculating the TDS, the employer obtains the investment proof and declaration from the employee. TDS is computed after calculating total earnings in the year and considering the amount of tax exemptions.
Section 10 of the I-T Act, 1961, allows tax exemptions on various allowances or benefits mentioned under different categories. These incomes will not be added to the total taxable income.
All taxpayers, including entities and individuals, must file their income tax returns if their annual income exceeds the basic tax exemption limit, as per the Income Tax Act.
The exemption limit for individuals is based on their age:
An individual with income less than Rs 2.5 lakh can file the tax return as it serves as income proof, helps one claim a tax refund, and apply for credit cards/ loans. Individuals selecting the new tax regime will have to file tax returns if their total income exceeds Rs 2.5 lakh.
For individuals, the due date to file ITR is July 31st of the assessment year.
Disclaimer: The information given above is only for reference. The tax exemptions are subject to the rules and regulations of the Income Tax Act.
Published on 13 Dec 2024
Published on 13 Dec 2024
Published on 13 Dec 2024
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