How to Calculate Income Tax [India]

Here is the basic set of data required to compute your income tax.

• Choose the Financial Year.

• Select Your Age Group Bracket: (i) “0 to 60” years. (ii) “60 to 80” years. (iii) “80 & above” years.

• Enter Your Taxable Salary: (i) If you want to calculate tax under the old tax slabs, enter your salary after deducting exemptions like HRA, LTA, etc. (ii) For tax calculation under the new tax slabs, input your salary without availing any exemptions.

• Include Other Income Sources such as: (i) Details of interest income, rental income, and interest paid on home loans (for rented or self-occupied property). (ii) For income from digital assets, enter the net income (sale consideration less cost of acquisition), which is taxed at 30% plus applicable surcharge and cess.

• If you want to calculate taxes under the old tax slabs, enter your tax-saving investments under sections 80C, 80D, 80G, 80E, and 80TTA.

About Section 80C Deductions

Section 80C of the Income Tax Act in India allows you to reduce your taxable income by up to ₹1.5 lakh per year. Both individuals and Hindu Undivided Families (HUFs) can claim Section 80C deductions. You can claim a maximum deduction of ₹1.5 lakh annually from your gross total income. Companies, partnership firms, and LLPs cannot avail this deduction. NOTE: These investments not only save taxes but also help you build wealth over time.

Eligible Investments and Expenses for Section 80C Deductions

• Equity Linked Saving Schemes (ELSS): Invest in ELSS mutual funds.

• Public Provident Funds (PPF): Contribute to PPF accounts.

• Life Insurance Premiums: Pay premiums for life insurance policies.

• Home Loan Principal: The principal amount of your home loan EMI.

• Sukanya Samriddhi Yojana (SSY): Invest in this scheme for your daughter’s education and marriage.

• National Savings Certificate (NSC): Purchase NSCs.

• Senior Citizen Savings Scheme (SCSS): Invest in SCSS.

• Employee Provident Fund (EPF): Contributions to EPF.

• Tax-saving Fixed Deposits (FDs): Invest in FDs with a lock-in period of 5 years.

• Tuition Fees: Pay tuition fees for your children’s education.

• Certain Mutual Funds: Invest in specific tax-saving mutual funds.

Other Tax Saving Options

Apart from Section 80C, there are several other tax-saving options in India. Here are some of them:

• National Pension System (NPS): Under Section 80CCD(1B), you can claim an additional deduction of up to ₹50,000 by contributing to the NPS. This means you can reduce your tax liability by ₹15,600 (assuming you fall under the 30% tax bracket) while considering the 4% educational cess.

• Health Insurance Premiums (Section 80D): Deductible amounts vary based on family composition and age: (i) Covering individual, spouse, and children: Up to ₹25,000. (ii) Covering senior citizens: Up to ₹50,000. If you’ve taken a policy for your parents, the premium limit is ₹25,000 for non-senior citizens and ₹50,000 for senior citizens, in addition to your family cover limit.

• Education Loan Interest (Section 80E): Interest paid on education loans is eligible for deduction without any upper limit. This applies to loans taken for higher education (for self, spouse, children, or a student you’re a legal guardian for.

• Home Loan Interest (Section 24): You can claim a deduction of up to ₹2 lakh on home loan interest for a self-occupied property. For a rented property, there’s no upper limit on the interest deduction.

• Electric Vehicle Purchase (Section 80EEB): If you buy an electric vehicle, you can claim a deduction of up to ₹1.5 lakh on the loan interest.

• Medical Treatment Expenses (Section 80DDB): For specified diseases, you can claim deductions on medical treatment expenses for yourself or your dependents. The limit varies based on age and disease