Everyone must know that a portion of their incomes goes to the government, which they use to provide public services, deliver goods to the country’s citizens, and pay government obligations. This tax is called income tax and must be filed annually to fulfill tax obligations. It is essential to know that there are various available that you can choose as your investment to save tax.
This article will tell you important things you need to know about online tax calculators.
What is an online tax calculator?
An online tax calculator is a tool that helps with evaluating taxes based on your income. It is calculated annually when the Union Budget is announced. Every individual fall under a different taxable income bracket, meaning they are liable to pay taxes depending on their annual income.
Moreover, income tax is the tax paid to the government for the services they provide. It can be deducted at source while disbursing salary or through income tax returns. An online tax calculator ensures that citizens pay their dues or income generated from other sources.
How to use an online tax calculator: Things to Know
You can follow the below-mentioned steps to use an online tax calculator:
- You will first have to choose the year for which you want to calculate taxes.
- Moving on, you will have to select your age. Depending on age and gender, income tax is calculated in India.
- The next thing to remember is the income bracket you fall under. There are different tax brackets in India for people falling under particular income brackets and providing details of your gross salary and other income sources like rentals, interests on home loans, if any, or any other income.
- The next step requires you to fill in the details of various deductions under the different sections of the Income Tax law. Also, you will need to fill in details of educational loan interest and saving account loans.
- The next step is to provide basic salary details, such as HRA, DA, TA, etc.
- The final step is to select the city that you live in and calculate your tax liability
As mentioned earlier, you must remember that the government of India allows you legally to opt for tax-saving options to save tax. Yes! You can legally save tax by investing in a few schemes such as the National Pension Scheme, life insurance, health insurance, and tax-saving mutual funds.
Moving on, let’s look at the various income tax slabs.
Understanding Tax slabs
It is essential to understand the different tax slabs since the tax slab category you fall under will put you in that specific taxpayer category. These categories are:
- Individuals below the age of 60, including residents and non-residents
- Senior citizens from age 60-80
- Resident super senior citizens- 80 plus years
Income tax slabs in India
The income tax slabs show the tax to be paid by individuals based on their annual income or earnings from multiple sources combined.
People who have an annual income of up to Rs. 2.5 lakhs have to pay no tax, and beyond this income, there are various tax slabs ranging from 5% up to 30%, depending on annual earnings.
An income tax calculator is an easy-to-use tool that considers all deductions and exemptions and then applies taxes to your income. This online calculator makes the work easy and efficient, provided that you keep all expenditures in mind and all tax-saving options you’ve invested in to calculate the exact tax amount. A defaulter must pay an additional amount to the government, which can sometimes lead to strict punishment.