Navigate the complexities of income tax calculations. Learn all about the uses of a salary tax calculator. Explore the process of calculating tax on salary and gain insights into filing tax returns.
Income Tax Calculating Tool 2023 – 24
Income Tax Calculation for FY 2023-24 – Overview
Income tax calculation for the financial year 2023-24 involves understanding various aspects such as taxable income, deductions, exemptions, tax slabs and return rates. The process of calculating income tax is crucial for individuals to ensure compliance with tax laws and to accurately determine their tax liability. You Can Try Using an Easy Tax Calculating Tool!
How to Use a Salary Tax Calculator?
Using a salary tax calculator involves the following steps:
Gross Salary: Enter your gross salary, which includes basic pay, allowances, and any bonuses or commissions.
Deductions: Input details of deductions such as provident fund contributions, professional tax, and any other applicable deductions.
Net Salary: The calculator will then compute the net salary after deducting taxes and other statutory deductions.
Federal and State Tax: The calculator will provide a breakdown of federal and state tax liabilities based on the entered salary details.
Example to Calculate the Income Tax
Let’s consider an example of income tax calculation for the financial year 2023-24 (FY 2023-24) for a taxpayer with a specific income level. In this example, we will assume an individual taxpayer with a gross annual income of INR 10,00,000.
Income Details:
- Gross Annual Income: INR 10,00,000
Tax Calculation under the Old Tax Regime:
- Tax Slabs for Individuals Below 60 Years:
- Up to INR 2,50,000: Nil
- INR 2,50,001 to INR 5,00,000: 5% of (Income – INR 2,50,000)
- INR 5,00,001 to INR 10,00,000: 20% of (Income – INR 5,00,000)
Calculation:
- Income up to INR 2,50,000: Nil
- Income from INR 2,50,001 to INR 5,00,000: 5% of (INR 10,00,000 – INR 2,50,000) = 5% of INR 7,50,000 = INR 37,500
- Income from INR 5,00,001 to INR 10,00,000: 20% of (INR 10,00,000 – INR 5,00,000) = 20% of INR 5,00,000 = INR 1,00,000
- Total Tax Liability: INR 37,500 + INR 1,00,000 = INR 1,37,500
Tax Calculation under New Tax Regime:
- Flat Tax Rates for Individuals Below 60 Years:
- Up to INR 2,50,000: Nil
- INR 2,50,001 to INR 5,00,000: 5% of (Income – INR 2,50,000)
- INR 5,00,001 to INR 7,50,000: 10% of (Income – INR 5,00,000)
- INR 7,50,001 to INR 10,00,000: 15% of (Income – INR 7,50,000.
Calculation:
- Income up to INR 2,50,000: Nil
- Income from INR 2,50,001 to INR 5,00,000: 5% of (INR 10,00,000 – INR 2,50,000) = 5% of INR 7,50,000 = INR 37,500
- Income from INR 5,00,001 to INR 7,50,000: 10% of (INR 7,50,000 – INR 5,00,000) = 10% of INR 2,50,000 = INR 25,000
- Income from INR 7,50,001 to INR 10,00,000: 15% of (INR 10,00,000 – INR 7,50,000) = 15% of INR 2,50,000 = INR 37,500
- Total Tax Liability: INR 37,500 + INR 25,000 + INR 37,500 = INR 1,00,000
In this example, the taxpayer with a gross annual income of INR 10,00,000 would have a tax liability of INR 1,37,500 under the old tax regime and INR 1,00,000 under the new tax regime.
Non Taxable Income in India
Certain types of income are non-taxable in India, including gifts, inheritances, life insurance benefits, disability insurance payments, workers’ compensation, and municipal bond interest. Understanding these non-taxable income sources is essential for individuals to ensure accurate reporting and compliance with tax regulations.
Who Can File ITR?
Individuals with an annual income exceeding specified thresholds, such as ₹2.5 lakh for individuals below 60 years, ₹3 lakh for individuals aged 60 to 79, and ₹5 lakh for individuals aged 80 and above, are required to file Income Tax Returns (ITR).
Additionally, individuals with specific types of income, such as NRI income, are also mandated to file ITR. The availability of Form 16, income exceeding ₹50 lakhs, and residency status are also factors determining the requirement to file ITR.
Benefits of Filing ITR Early
Filing ITR early offers several benefits, including:
Tax Refunds: Early filers may receive tax refunds sooner, providing access to funds for various financial needs.
Avoiding Penalties: Timely filing helps individuals avoid penalties and legal repercussions associated with late or non-filing of ITR.
Loan Processing: Early filing of ITR facilitates smoother loan processing, as it provides evidence of income and tax compliance to financial institutions.
Financial Planning: Early filing allows individuals to plan their finances effectively based on their tax liabilities and refunds.
Availing Tax Benefits: Early filers can avail of tax benefits and deductions in a timely manner, optimising their tax planning strategies.
Income Tax Notice: Early filers reduce the risk of receiving income tax notices and unnecessary audits, ensuring peace of mind and compliance with tax laws.
Who Has to File ITR?
If your income is less than the basic exemption limit, then yo
u are not required to pay income tax. However, if you have an income of less than ₹2.5 lakh and want to claim a refund, you will have to do so by filing your ITR. Otherwise, filing ITR is mandatory.
The easiest way to get your income tax filing online done is through Vakilsearch. You don’t have to worry about keeping up to date with all the changes or get confused as to which mechanism to pick. Reach out to us and our experts will guide you and file the returns for you.
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