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Friday, September 11, 2015

How To Calculate Income Tax In India- Simple Steps To Follow

How To Calculate Income Tax In India


For any tax paying individual, having knowledge of How To Calculate Income Tax In India can only make life simpler. It will not only assist you to know the amount of tax you need to pay in an economic year but also provides you a precise idea of saving tax. Income Tax is tax imposed on the revenue of an individual by the Government. We are here to tell you some simple steps that you may follow for calculation of Income tax in India.

How To Calculate Income Tax In India

Government collects a charge on your earning in the form of Income Tax. It is designed entirely on the Indian Equity Laws. You will have to pay according to your earning which means, if you get more then you have to pay more.

The Tax is categorized in the following categories:
  • Income/Salary
  • Business/Profession
  • Capital Gains
  • Property/ House
  • Other Sources


How To Calculate Income Tax In India


Simple Steps to Follow

How To Calculate Income Tax In India
  1. You must calculate your annual Income through multiplying 12 in to your monthly salary.
  2. Now calculate the total contributions towards the different conditions in accordance to Income Tax Rules.
  3. Make a calculation of your gross savings. You have to calculate all the savings or investments exist in Income Tax Saving Scheme Sections.
  4. Now plus the amount you got through the 2nd and 3rd point mentioned above and then minus your gross salary.
  5. Now you have your taxable income, go through the slabs to calculate your Income Tax.
  6. Now add 3% of your taxable income as the Educational Cess to the income tax you calculated.

Income Tax Rates for FY 2014-15 and 2015-16:

Below table provides information of Income Tax Rates to be paid by individuals under 60 years of age:

Tax Slab
FY 2015-16
FY 2014-15
Tax Rate
Up to Rs.2,50,000
No Tax
Rs.2,50,000 - Rs.5,00,000
10%
Rs.5,00,000 - Rs.10,00,000
20%
Rs.10,00,000 and beyond
30%


Things to know about Income tax:

The Investment limit for the judgment in Section 80C of Income-Tax Act, 1961 was increased from Rs 1 lakh to Rs 1.5 lakh according to the budget 2014-15. This will lead to a highest saving of Rs. 15,450 for investors. The most general investments fall under this section:
  • Life Insurance policies
  • Employees Provident Fund
  • National Savings Certificates
  • ULIPs (Unit Linked Insurance Plans)
  • Repayment of home loan meant for principal amount merely.
  • Pension Funds u/s 80CCC
  • Tax saver Mutual Funds – Equity Linked Savings Scheme
  • Tuition fees of children’s education

Other Beneficial Links:

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