Filing of income tax returns is a very crucial process. Not only that, it’s a very tedious and confusing process too. People get confused over what all parts of their incomes to be included while calculating the income tax. The Income Tax Calculator is a novel method to take away the worry from the people and give them peace of mind.
Online Income Tax Calculator
Now the first question that arises is how much tax does a person have to pay? The answer to this question is that tax that is to be paid depends on the tax slab which is applicable to one’s salary. The Income Tax Calculator also uses these slabs to calculate the taxes to be filed.
Income Tax Calculator for the Salaried Individuals
Salaried individuals have to pay taxes in a manner different to that of business people. Basically, the Income Tax Calculator for salaried people is actually the sum of their basic salary with House Rent Allowance, special allowance, transport allowance and other allowances.
Portion of Income Exempt from Taxes
The salaried individuals need not pay taxes on their entire income. There are certain components of their income which doesn’t come under taxable list. If a person gets medical reimbursement or telephone bills reimbursement, these components are exempt from taxes. Other than that, if a person receives House Rent allowance and lives on rent. The person can claim exemption on the house rent allowance.
Calculation of Exemptions
While calculating the taxes, people should make sure to calculate the various exemptions they are eligible for. Individuals are advised to use the HRA calculator to calculate the exempt portion of HRA. Companies provide the employees with transport allowance to facilitate their travel to and fro to their workplace. Let’s say the present allowable limit for exemption on travel allowance is 1600 per month. Let us imagine the employee receives 2500 as their monthly travel expense. Then for them, the 1600 will be exempt from tax and the remaining portion, i.e. the 900 per month or Rs 10800 will be taxed as salary income.
Income Tax Calculator
The first step to income tax calculation includes incomes from all possible sources:
Salary- first step is to include the basic salary that the employers pay.
House/property rental- if you own a home/property that you have let out on rent, that income is to be included and don’t forget to include interests that are being paid on home loan
Capital gains income- in case you deal with share or properties, be sure to include the income from the sale of properties and shares.
Business/ freelancing/profession- in case an individual works as a freelancer or business or profession income.
In case of an individual has a saving account, fixed deposit, bonds, etc, they should be sure to include all the income generated from the interests on these sources.
Claim Both HRA and Home Loan Interest Deduction
One other common question that most salaried individuals have is whether they can claim both House Rent Allowance and also tax benefits from house property related in order to lower their taxable income. In order to answer the various questions and to clear the confusion, the following are the items for which an individual:
They can claim HRA exemption in lieu of rent payment
According to Section 24, they can claim deduction on home loan interest
Under Section 80, principal repayment can be applied for.
Calculation of Advance Taxes
There is another mode of tax payment known as an Advance tax. The question arises, what is it? The answer to it is that it is a form of taxes that are paid in advance rather paying as a whole total at the end of the year. The other term used for it is pay as you earn tax. The paying of this type of tax is easy enough, alone has to do is to pay the installments according to the dates given by the income tax department.
Who All Should Pay Advance Tax?
Following people need to pay advance Taxes:
Salaried individuals, freelancers, and business people: any individual whose total tax liability crosses 10,000 or more in a particular financial year has to pay the Advance Tax. This tax is applicable to all taxpayers, salaried individuals and businesses including freelancers.
Presumptive businesses: where the business income is assumed to be 8% of turnover of less than 2 crores will be exempt from advance tax
Presumptive income for businesses: if taxpayers opt for the presumptive scheme they should pay the entire amount of the advance tax before 15th March.
Presumptive income for individuals: professionals like doctors, lawyers, architects, etc. who have gross receipts of 50 lakhs and less have to pay Advance taxes now. Such individuals have to pay Advance Tax in quarterly installments.
Leave Comment