Income Tax Calculator

Income Tax Calculator - FY 2023-2024

Introduction of Income Tax Calculator

Wondering how to estimate your taxes after the unveiling of the Union Budget 2023-24? You're in luck! The Income Tax Calculator can help simplify this process for you. This user-friendly online tool aligns with the latest changes made in this year's budget, making it as simple as pie to calculate your tax based on your income. For the highlights of the Union Budget, check this link. 

Mastering the Income Tax Calculator for FY 2023-24 (AY 2024-25)

Breaking down the steps for using the tax calculator:

• 1. Begin by selecting the financial year for which you wish to calculate your taxes.
• 2. Indicate your age, since tax obligations in India vary based on age brackets.
• 3. Proceed with the 'Go to Next Step' button.
• 4. Now, it's time to key in your taxable income. This refers to your salary after subtracting exemptions such as HRA, LTA, and more (if you're calculating income tax under the old slabs). 
  If you're aiming to understand tax implications under the new slabs, just provide your full salary without deductions like HRA, LTA, professional tax, etc.
• 5. Alongside your taxable salary, input other relevant details such as interest income, rental income, as well as the interest paid on home loans (both rented and self-occupied properties).
• 6. For digital assets income, register the net income (sale amount minus acquisition cost). Note that this income will be subject to a 30% tax, alongside any applicable surcharge and cess.
• 7. Click on 'Go to Next Step' once more.
• 8. If you're choosing to calculate your taxes with the old slabs, you'll need to input your tax-saving investments under sections 80C, 80D, 80G, 80E, and 80TTA. 
• 9. Finally, hit 'Calculate' to see your tax liability result. Additionally, you'll get a comparison of your tax responsibilities pre and post-budget (between old and new tax slabs)
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Please note: Feel free to enter "0" if any field isn't applicable to you.  You also have the option of receiving your tax computation via email.

How to calculate income tax? (See example)

Income tax calculation for the Salaried

Income from salary is the sum of Basic salary + HRA + Special Allowance + Transport Allowance + any other allowance. Some components of your salary are exempt from tax, such as telephone bills reimbursement, leave travel allowance. If you receive HRA and live on rent, you can claim exemption on HRA. Calculate exempt portion of HRA, by using this HRA Calculator.
Exciting changes were made in the budgetary announcements of 2018 and 2019, which saw an introduction and subsequent increase to a standard deduction of Rs 40,000, skyrocketing up to an astounding Rs 50,000! This deduction continued to be applicable in the Budget 2023, introducing an additional benefit for those choosing to slide into the new tax regime too. 
However, beware. If you decide to step into the fresh waters of the new tax regime, some exemptions you had before might wave goodbye. Make sure to weigh your options skillfully. 
Wondering how income tax calculations work within the current tax slabs and optional new tax slabs? Let's take a journey through an example. Our lead character here is Himanshu, earning a handsome basic salary of Rs 1,00,000 each month. Not to mention his HRA of Rs 50,000, a special allowance of Rs 21,000 monthly, and an LTA of Rs 20,000 annually. Himanshu's lifestyle in Delhi is supported in part by his rent of Rs 40,000. Now, let's see how this all unfolds in his income tax calculations.

To calculate Income tax, include income from all sources. Include:

• Income from Salary (salary paid by your employer)
• Income from house property (add any rental income, or include interest paid on home loan)
• Income from capital gains (income from sale purchase of shares or house)
• Income from business/profession (income from freelancing or a business or profession)
• Income from other sources (saving account interest income, fixed deposit interest income, interest income from bonds)

Himanshu has income from interest from savings account of Rs 8,000 and a fixed deposit interest income of Rs 12,000 during the year. Himanshu has made some investments to save income tax. PPF investment of Rs 50,000. ELSS purchase of Rs 20,000 during the year. LIC premium of Rs 8,000. Medical insurance paid of Rs 12,000. Here are the deductions Himanshu can claim under the old tax regime.

Calculation of gross taxable income in India (Old regime)

Calculation of gross taxable income in India (New regime)

This is how income tax has been calculated for Himanshu under the new tax regime

Curious about the exemptions or deductions that are no longer permissible under the new tax regime? Read on to gain some clarity. 

If you're an individual or a Hindu Undivided Family (HUF) who's now paying tax under the recently initiated section 115BAC of the Act, you will not have access to the following exemptions or deductions:

• 1. Leave Travel Concession (section 10, clause 5)
• 2. House Rent Allowance (section 10, clause 13A)
• 3. Certain allowances (section 10, clause 14)
• 4. Allowances for Members of Parliament/Members of Legislative Assembly (section 10, clause 17)
• 5. Allowance for the income of a minor (section 10, clause 32)
• 6. Exemption for Special Economic Zone (SEZ) units (section 10AA)
• 7. Deductions for entertainment allowance and employment/professional taxes (section 16)
• 8. Interest under section 24 related to self-occupied or vacant properties, as referred to in section 23, sub-section 2. Please note, any loss under the head income from house property for rented property will not get set off against any other head but can be carried forward as per extant law; 
• 9. Additional depreciation under section 32, clause iia of sub-section 1
• 10. Deductions under sections 32AD, 33AB, and 33ABA;
• 11. Various deductions for donations or expenditures on scientific research as per sub-sections 1 or 2AA of section 35;
• 12. Deductions under sections 35AD or 35CCC;
• 13. Deductions from family pension under section 57, sub-section iia;
• 14. Any deductions under chapter VIA (example: sections 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, etc). However, deductions under section 80CCD's sub-section 2 (employer's contribution to the employee's notified pension scheme) and section 80JJAA (for new employment) are still permitted. 
  Despite this, if you're an individual or a HUF choosing to operate under this proposed section, you're entitled to certain allowances as listed under section 10 (14) of the Act: 
• a) Transport allowance for differently-abled employees to cover commuting costs between your residence and place of work
• b) Conveyance allowance to cover the costs associated with performing your office duties
• c) Any allowance intended to cover the costs of travel during tours or transfers
• d) Daily allowance to cover the ordinary day-to-day expenses incurred by an employee due to absence from their regular place of work.
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Frequently Asked Questions ( FAQ’s )

How much tax should I pay on my salary in New Regime?

You will be required to pay a tax depending on the income slab you belong to.

Income Tax Rates applicable for individuals under 60 years of age in case of new regime

Suppose you have a taxable income of Rs 9 lakh, your tax will be calculated as follows:

Hence, you will be required to pay a tax of Rs 45,000 (excluding cess) on your taxable income i.e. Rs 9 lakhs.

What is the maximum non-taxable income limit?

Did you know, under the old tax regime, an individual could earn up to Rs 2.5 lakh income without being taxed? It gets better! A rebate of Rs 2,500 under section 87A was also available if your total income did not exceed Rs 3.5 lakhs during FY 2018-19. As we moved into the FY 2019-20, the rebate increased significantly, rocketing to Rs 12,500 but only for an income up to Rs 5 lakh. What does this mean for you? Simply put, if your earnings were up to Rs 5 lakh, you wouldn't have had any income tax to pay from the FY 2019-20. And here's a bonus tip: if you made tax saving investments under section 80C--up to Rs 1.5 lakh--you would have been tax free even if you earned Rs 6.5 lakhs. 

Fast forward to the budget announcement in 2023, adopting the New Regime can reap in more benefits. Now, the bar for tax-free income rose to Rs 3 lakh for individuals. As if that wasn't enough, the rebate under section 87A shot up to Rs 25,000, assuming your total income for FY 2023-24 didn't exceed Rs 7 lakhs. This translates to zero income tax for anyone earning up to Rs 7 lakh in the FY 2023-24 and beyond. However, under the old regime, remember, the rebates under section 87A are capped at an income of Rs 5 lakhs.
 

Does everyone have to file their income tax returns?

Wondering about your income tax return obligations? The rule of thumb is straightforward - as long as your income doesn't exceed the basic exemption threshold, you're not obligated to file an income tax return. Under the old regime, this threshold is set at Rs. 2.5L and jumps to Rs. 3L under the new regime. A little advice though, even if you fall below these limits, but you're looking to secure a refund, you'll need to file an Income Tax Return (ITR). Outside of these scenarios, take note - filing income tax returns is a must.

Does the income tax calculator calculate for TDS?

Just to clarify, our income tax calculator isn't equipped to calculate the Tax Deducted at Source (TDS). However, what it does exceptionally well is figuring out your tax liability for the upcoming assessment year. You'll find it incredibly handy for that!

What are the details you need when you're e-filing your income tax returns?

When it comes to filing your taxes, it’s essential that you start off with gathering some of your vital details. First and foremost, you'll need your essential identification details, that include items such as your Permanent Account Number (PAN), Aadhar Card information, and accurate current residential address. 

In addition, it's important to have a comprehensive record of all the bank accounts that you've held throughout the financial year. This ensures that every financial movement can be tracked and accounted for in your income tax calculation. 

Moving along, you'll also need to compile solid proof of all your income sources. This typically includes your current salary details, but don't forget about any additional earnings from investments like Fixed Deposits or your savings bank account. Every penny counts when it comes to calculating your taxable income. 

Don’t overlook the importance of keeping a thorough record of all deductions claimed under Section 80 or Chapter VI-A. These can significantly reduce your tax liability - but only if you can document and prove them. 

Lastly, remember to gather all your tax payment data. This includes items like tax deducted at source (TDS) and any advance tax payments you've made. By having these details at hand, you'll have a complete and precise tax calculation for the financial year 2023-2024.