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Your Tax Liability or the amount of income tax, you need to pay depends on the Income Tax Slab or the income tax bracket, you belong to.
Here are the following Income Tax slabs, for the financial year 2017-18: -
| Income Slab | Tax Rate |
|---|---|
| Up to Rs.2,50,000 | No Tax |
| Income between Rs.2,50,000 - Rs.5,00,000 | 5% |
| Income within Rs.5,00,000 - Rs.10,00,000 | 20% |
| Income of Rs.10,00,000 and above | 30% |
| Income Slab | Tax Rate |
|---|---|
| Income up to Rs. 3,00,000 | No Tax |
| Income between Rs. 3,00,001 - Rs. 5,00,000 | 10% of income exceeding Rs. 3,00,000 |
| Income between Rs. 5,00,001 - Rs. 10,00,000 | Rs. 20,000 plus 20% of income exceeding Rs. 5,00,000 |
| Income above Rs. 10,00,000 | Rs. 1,20,000 plus 30% of income exceeding Rs. 10,00,000 |
| Income Slab | Tax Rate |
|---|---|
| Income up to Rs. 5,00,000 | No Tax |
| Income between Rs. 5,00,001 - Rs. 10,00,000 | 20% of income exceeding Rs. 5,00,000 |
| Income above Rs. 10,00,000 | Rs. 1,00,000 plus 30% of income exceeding Rs. 10,00,000 |
| Income above Rs. 10,00,000 | Rs. 1,20,000 plus 30% of income exceeding Rs. 10,00,000 |
Your income from salary is a sum of your basic salary, House Rent Allowance, Transport Allowance along with other allowances. There are a few sections of your salary, that are exempted from your income tax, they are medical reimbursement, phone bill reimbursement etc. If you get HRA and you stay in a rented house, then you can claim for the exemption of HRA. You can calculate HRA using this HRA calculator
Transport allowances are provided to the employees as a part of their salary, using which employees meet their traveling needs. For calculating Income tax in India you need to add income from various sources, these sources are Income from Salary, Income from House Property, Income from Capital gains, Income from Business/ Profession as well as income from various other sources.
When we calculate Income tax, we must also know about how Tax Deducted at Source or TDS is calculated.
When you are calculating TDS, you must calculate your annual salary and you need to deduct various exemptions and deductions, that will lower your taxable income. Other than this you must also calculate the amount spent on travel and house rent. Here, the rent amount can be calculated according to the rent agreement. Other expenses like medical expenses, travel expenses can be calculated on the basis of the past year’s expenses. You just need to give the above-mentioned details to the accounts department, so that they can calculate your tax liability.
Example
Mr.Mohan has submitted his income and investment details for the Financial Year 2017-18, as mentioned below: -
| Particulars | Amount (in Rs.) |
|---|---|
| Basic Salary | 8,40,000 |
| House Rent Allowance | 4,20,000 |
| Transport Allowance | 24,000 |
| Employer’s contribution towards PF @12% of basic pay | 1,00,800 |
| Pay | - |
| Leave Travel Allowance | 75,000 |
| Deposit in Public Provident Fund Account (PPF) | 1,50,000 |
| Mediclaim Premium paid (for self) | 24,000 |
Mr. Mohan pays rent of Rs. 20,000 per month in Mumbai. He travelled to Pune with his family on a holiday trip and he had to pay Rs. 40,000 for the tickets and here’s how Mr. Mohan can calculate his Taxable income.
| Particulars | Amount (in Rs.) | Amount (in Rs.) |
|---|---|---|
| Basic pay | - | 8,40,000 |
|
+ Transport Allowance
(-) Exemption |
24,000
(19,200) |
4,800 |
|
+ House Rent Allowance
(-) Amount of HRA exempted (Lower of below 3 figures)
|
3,36,000 | - |
|
+ Leave Travel Allowance
(-) Amount exempted on Leave Travel Allowance |
75,000
(40,000) |
35,000 |
| Gross Salary | - | 10,59,800 |
|
Less: Deductions under chapter VI-A
Under section 80C (capped at Rs. 1,50,000)
|
1,00,800, 1,50,000 | (1,50,000) |
| Mediclaim premium paid (Under section 80D) | - | (24,000) |
| Taxable income under salaries | - | 8,85,800 |
| Tax on salary (for the year) | - | 1,05,220 |
| TDS amount per month = (Tax for the year/12) | 8,768 |
According to the above-mentioned table the tax liability of Mr. Mohan is 8,85, 800 and the tax he is required to pay on his income can be calculated as follows: -
| Up to Rs. 2,50,000 | Exempt from tax | Amount(in Rs.) |
|---|---|---|
| Up to Rs. 2,50,000 | Exempt from tax | 0 |
| Rs. 2,50,000 - Rs. 5,00,000 | 10% (10% of Rs. 5,00,000 (-) Rs. 2,50,000) | 25,000 |
| Rs. 5,00,000 - Rs. 10,00,000 | 20% (20% of Rs. 8,85,800 less Rs. 5,00,000) | 77,160 |
| More than Rs. 10,00,000 | 30% | 0 |
| Education Cess | 3% of total tax (3% of Rs. 25,000 + Rs. 77,160) | 3,065 |
| Total Income Tax | Rs. 25,000 + Rs. 77,160 + Rs. 3,065 (Rounded off to nearest 10 rupees multiple) | 1,05,220 |
Hence, the total income liability for Mr. Mohan would be 1,05,220 for the financial year 2017-18.
An assessment year is the year in which you file your income tax returns, it is the year in which your income which you have earned in Financial year, which just got over will be calculated. If you have earned between 1st April 2017 to March 31st, 2018 then your assessment year will be 2018-19.
Financial year is also called as the previous year or the income year, it is the preceding year of the Assessment year. For example: - For assessment year 2017-18, the financial year will end on March 31st, 2018.
When your annual income exceeds the income tax bracket set by the Income Tax Department, you are liable to pay taxes. You are supposed to pay tax on the excess income you earn. Income Tax is calculated for a period from April 1st to March 31st. This period is called as financial year. The revenue generated from tax is used for the development of the Country.
Basic Details
In this section, firstly you need to fill your name.
You need to fill you age, as it will decide the income tax slab applicable for you.
In this section, you need to fill your residential address.
You need to mention your Taxable income, that is the amount you get as salary.
You also need to fill your income from interest or other income.
In this section of the income tax calculator, you also need to mention the interest you pay for loan, the income you receive from rent and the interest you pay for home loan. Be careful as you have to mention both Home loan interest as well as any other loan interest in this section.
You need to fill basic deductions as per the section 80C of income tax act.
Here you will have to mention the amount you get as interests from savings under section 80TTA.
You also need to fill the amount that is given as donation or charity under section 80G.
Here you are supposed to mention the amount you pay as the Medical Insurance Premium as per section 80D.
Last but not the least, in this section you need to fill the amount you pay as an interest for Educational loan under section 80E.
The last section of the tax calculator needs you to fill, following details: -
TDS deducted from salary by the employer.
TDS deducted from any other source, other than salary.
In the last section of this part you need to fill your advance tax, which you have already paid to the government, other than your TDS.
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