What is an income tax calculator? How does it work?
Posted by swaralichavan36 on April 21st, 2019
The Income Tax Act of 1961 is the law that lays the rules for tax payments. All the people and entities residing in India must abide by the Income Tax Act. They must also pay tax and submit the annual returns if the income amount exceeds the slab directed by the Act.
The Income Tax Act offers two crucial information – the exempted tax amount and the tax rates applicable on each financial year or previous fiscal year. This period is between April 1 to March 31. How to calculate income tax? There is a facility available called Income Tax calculator.
How does it work?
Before using the income tax India calculator, understand the following aspects:
1) Who is liable to pay taxes in India?
2) How to compute gross taxable income?
Any income received or accrued by an Indian resident in the previous year, are subject to taxes. Plus, any non-resident who received salary in India is also eligible for tax. As per the Income Tax Act, the following aspects fall under income earned:
3) Which income is not part of the gross taxable income?
4) What are the permissible deductions?
While using the income tax calculator, the following deductions are applicable:
- Life insurance policies and PPF
- The principal portion of housing loan
- Tuition fees to school, colleges, and university
- Stamp duty or registration fees paid when transferring house property
- FD opened for tenure not less than 5 years with a reputed bank or post office
- Any investment in ELSS funds with a lock-in period 3 years
- Amount paid towards the policy of the assessee or their family members for maximum INR 25,000
- Amount paid towards the policy of the assessee or their family members’ senior citizens for maximum INR 30,000
The best part about investments is there is a calculator available for each of them, to help you make an informed decision. For example, mutual funds have calculators for mutual funds, SIP calculator, lumpsum calculator, and retirement calculator.Also See: Income Tax, Tax Act, Tax Calculator, Taxable Income, Tax, Income, Received
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