Income Tax Calculator FY 22-23 – How To Use, Tax Benefits And Exemptions
The income tax calculator is a convenient online tool with which you can calculate the amount of tax you are liable to pay in a particular financial year. This calculator takes various factors such as income, deductions, exemptions and others to provide an estimation of your tax liability.
The following sections will help you to understand how tax is calculated on income using an online tax calculator for FY 22-23.
Steps to Use Income Tax Calculator
You can use the following step-by-step guide which uses basic income tax formula for calculating income tax with an online tax calculator:
- Step 1: Firstly, choose the assessment year for which you wish to calculate your income tax.
- Step 2: Now, choose the age bracket since income tax in India varies depending on the age of an individual.
- Step 3: Provide necessary information about your gross salary. Moreover, you have to enter details such as income from additional sources, interests paid for home loans, and others.
- Step 4: Next, enter details about different deductions available under the following sections: Section 80C, 87A, 80CCD (1B), 80G, 80E, 80D, 80GG, 80TTB, 80TTA. Now, provide information about HRA and LTA exemptions. Enter ‘0’ in fields not applicable to you.
- Step 5: Finally, click on the ‘Calculate’ option.
Your income tax liability will be displayed on the screen.
How to Calculate Gross Salary
Gross salary is the amount (yearly or monthly) that you would receive from your employer before any deductions are being made. Your gross salary would include basic pay, HRA, conveyance allowance, medical allowance., any special allowance, leave travel allowance and more.
Here is how you can calculate gross salary:
- Step 1: Get to know your basic salary
- Step 2: Add HRA and other allowances that form the gross pay along with the basic salary
- Step 3: After calculation of all the components you will get your gross salary
Example:
The following example will make it easier for you to get an idea of the gross salary
Suppose Mr Verma works for an IT organization. His gross monthly pay is Rs. 75,000 and his net monthly salary is Rs. 57,800.
Following is the breakdown of the salary components:
- Basic salary: Rs. 30,000
- HRA: Rs. 20,000
- Travel allowance: Rs. 15,000
- LTA: Rs. 10,000
- Gross monthly salary= Rs. 75,000
Deductions:
- Provident fund: Rs. 2,000
- Insurance premium: Rs. 5,000
- Professional tax: Rs. 200
- Loan deduction: Rs. 10,000
- Total deduction= Rs. 17,200
Net salary = gross salary – deduction= Rs. 75,000- Rs. 17,200= Rs. 57,800
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Calculating Income Tax Liability via Income Tax Calculator
The online income tax calculator takes the following parameters into consideration while calculating income tax:
- Yearly income from salary or other profits
- Income from additional sources such as investment, rentals, and others
- Accommodation expenses and travel allowances
- Exemptions, if any
You can find your total tax liability by providing accurate information under each segment. After subtracting the TDS, you can deposit the income tax online directly through the official portal. However, if the tax paid is more than the liability, the government will reimburse the extra amount within 30 days of tax filing.
In case you deposit your income tax after the due date, you are liable to pay interest under Section 234A with a penalty under Section 234F. So, make sure to file your tax returns within the due date. This date will depend on the category that a taxpayer belongs to.
About Income Tax Slabs in India
Income tax slabs show the rate of income tax for different categories of taxpayers in India based on their yearly income. The following tables show the income tax slabs for two separate tax regimes of the country:
The income tax slab of the new tax regime for assessment year 21-22 is as follows:
| Taxable income | Tax rate |
| Up to Rs. 2,50,000 | NIL |
| Rs. 2,50,001 to Rs. 5,00,000 | 5% of the income above Rs.2.5 lakh |
| Rs. 5,00,001 to Rs. 7,50,000 | Rs. 12,500+ 10% of total earnings above Rs. 5 lakh |
| Rs. 7,50,001 to Rs. 10,00,000 | Rs. 37,500 + 15% of total earnings above Rs. 7.5 lakh |
| Rs. 10,00,001 to Rs. 12,50,000 | Rs. 75,000+ 20% of earnings above Rs. 10 lakh |
| Rs. 12,50,001 to Rs. 15,00,000 | Rs. 1,25,000+ 25% of the total earnings over Rs. 12.5 lakh |
| Above Rs. 15,00,000 | Rs. 1,87,500+ 30% of total earnings over Rs. 15 lakh |
* 4% Cess is applicable on the overall tax amount
The old regime income tax rates for assessment year 21-22 are as follows:
1. For taxpayers below the age of 60 years:
| Taxable income | Tax rate |
| Up to Rs. 2,50,000 | Nil |
| Rs. 2,50,001 to Rs. 5,00,000 | 5% tax with 4% cess |
| Rs. 5,00,001 to Rs 10,00,000 | Rs. 12,500 + 20% tax with 4% cess |
| Above Rs. 10,00,000 | Rs. 1,12,000 + 30% tax with 4% cess |
2. For taxpayers between 60 and 80 years:
| Taxable income | Tax rate |
| Up to Rs. 3,00,000 | Nil |
| Rs. 3,00,001 to Rs, 5,00,000 | 5% tax with 4% cess |
| Rs. 5,00,001 to Rs. 10,00,000 | Rs. 10,500+ 20% tax with 4% cess |
| Above Rs. 10,00,000 | Rs. 1,11,000 + 30% tax with 4% cess |
3. For taxpayers above 80 years:
| Taxable income | Tax rate |
| Up to Rs. 5,00,000 | Nil |
| Rs. 5,00,001 to Rs. 10,00,000 | 20% + 4% cess |
| Above Rs. 10,00,000 | Rs. 1,00,000+ 30% tax + 4% cess |
Advantages of Filing Income Tax Returns Online
If you have the facility of internet available to you, you should opt for e-filing your income tax returns online. Here’s why you need to file ITR online:
- Faster processing: The processing of income tax returns is faster than manual filing, especially if you have any refunds that can get promptly processed.
- Accuracy: Paper filing of tax returns always carries the risk of errors. The same is true for data entry during the migration of information into a system. E-filing minimizes the risk of error significantly and helps to make the process seamless.
- Security: While physically filing your income tax returns, there is always a chance of your details falling into the wrong hands. But through e-filing your data gets privacy and there is also no chance of data theft.
- Convenience: Unlike paper filing, the facility of e-filing is available to you 24/7. You can file your income tax return anytime from anywhere. There is also the option of ‘file now, pay later’ where you can decide when to debit the tax payment from your bank account.
- Accessibility: While filing for an IT return for the current year, you can also access your past data of income tax filing which are securely stored.
- Confirmation receipt: Upon the successful filing of your IT return, you will get proof of receipt via the registered email ID.
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Documents Needed for E-Filing Income Tax Returns
You will need to keep the following documents handy while e-filing income tax returns:
- Aadhaar Card
- Pan card
- Form 16
- Form 16A/ 16B/ 16C
- Form 26AS
- Latest bank account details
- Documents of tax-saving instruments such as ELSS, tax-saving FD, etc.
- Home loan statement
- Details of income earned from rent
- Capital gain details
- Income from foreign sources details
- Dividend income details
Eligibility Criteria for Filing Income Tax returns
According to the rules of Income Tax, any individual having an income exceeding Rs. 2,50,000 / 3,00,000/ 5,00,000 should file for income tax return.
Apart from the above-mentioned criteria, an individual should file for ITR even if his income doesn’t cross the above limits of income, under the following circumstances:
- If expenses of travel for moving into another country exceed Rs. 2 lakh
- If the amount of deposit into one or more current accounts exceeds Rs. 1 crore
- If the total amount as mentioned in the bill of electricity crosses Rs. 1 lakh
- If an individual has a bank account or is a beneficial owner of an asset situated outside India/ has any source of income outside India/ has signing authority into any account in any country other than India
How to Save Tax on Salary?
Knowing the available deductions under Income Tax will help you save tax on your hard-earned salary. Following are the ways under which you can claim tax deductions or exemptions on income tax:
- House rent allowance (HRA): If you reside in a rented house or apartment, the house rent allowance you receive is partially or wholly exempted from tax.
- Leave travel allowance: If an employee takes a trip within India along with their spouse, children and/or parents, they can submit the bills to the employer for claim reimbursement. These expenses are exempted from tax.
- Contribution towards provident fund: Employee and employer make the same percentage of contribution towards the Employee Provident Fund. The maturity amount is exempted from tax. Also one can claim deductions on the contributions made towards EPF under Section 80C of the Income Tax Act.
- Professional tax: Professional tax of a maximum of Rs. 2,500 is paid by an employee to the State Government. It is allowed as a deduction from your salary.
- Standard deduction: Standard deduction was previously conveyance allowance and medical allowance. Employees can claim Rs. 50,000 tax deduction on standard deduction from the income earned.
- Leave encashment: An employee having paid leaves left at the time of resignation or retirement can ask for encashment. This leave encashment is taxable under the head’s income from salary.
Exemption allowed under Section 89(1): You can claim a tax deduction on the salary received in advance.
Voluntary retirement: If you opt for voluntary retirement, the compensation received is exempted from tax provided the receipt complies with rule 2BA. Maximum deductions claimed can be Rs. 5,00,000. - Pension and gratuity: Gratuity is given to an employee upon providing service for that organization for more than five years. The pension given is considered as salary and is taxable.
- Charities made to political parties: Charity or donation made towards political parties is exempt from tax under Section 80CCG.
- Medical insurance: You can claim a tax deduction of Rs. 25,000 on the medical insurance premiums paid. This is only available for premiums paid towards policies for parents, spouse or children. If your parents are senior citizens, you can claim Rs. 50,000 of deduction.
- House loan: You can claim a tax deduction towards the interest and principal repayment of a house loan. This loan must be taken for the construction, or purchase of a home. The maximum deduction limit for interest payment is of Rs. 2 lakh under Section 24 (b) and Rs. 1.5 lakh for principal repayment under Section 80C of Income Tax.
- ELSS: Investment made towards ELSS is eligible for tax deduction under Section 80C. The maximum limit of deduction is Rs. 1.5 lakh.
Tax Exemptions that are Not Allowed for Calculating Income Taxes under the New Tax Regime
The following are some exemptions and deductions you cannot claim under the new income tax regime:
- Leave travel allowance
- House rent allowance
- Standard deductions
- Any deduction applicable under Section 80TTA and 80TTB, or for recreational allowances of government employees
- Children education allowance
- Helper allowance
- Minor child income allowance
- Special allowances under Section 10(14)
- Interest payment towards the home loan on self-occupied or vacant property under Section 24
- Chapter VI-A deductions
- Deduction on family pension income
- Deduction on other perquisites or allowances
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Exemptions under Income Tax Act
Following are the types of income and their sections of tax exemption:
| Income Tax Section | Type of Income |
| 10(1) | Income from agriculture |
| 10(2) | Share from the income of HUF |
| 10 (2A) | Share of profit of the companies whose taxes are filed distinctly |
| 10 (3) | Income earned from literary, scientific or artistic work, sports and games within the maximum limit of Rs. 5,000 and for a horse race, the limit is Rs. 2,500 |
| 10 (10D) | Income receipt from a life insurance policy |
| 10 (16) | Scholarship for educational expenses |
| 10 (17) | Allowances for MLA and MP. |
| 10 (17A) | Awards approved by Central or State Government |
| 10(26) | Income earned by members of scheduled tribes of North-Eastern states or region of Ladakh |
| 10(26A) | Income earned by residents of Ladakh within Ladakh or outside India |
| 10(30) | Subsidy earned from Tea Board by an approved scheme |
| 10 (31) | Subsidy earned from the concerned authority under an authorized scheme of plantation |
| 10 (32) | Income by a taxpayer including that of a minor child not exceeding Rs. 1500 |
| 10 (33) | Dividends received by Indian companies, Unit Trust of India, Mutual funds and venture capital |
| 10 (A) | Profits earned in free trade areas, electronic hardware or software technology park during the period of 10 years |
| 10 (B) | Profits earned by a taxpayer from hundred-per cent export oriented undertaking, manufacture of articles and software for a period of 10 years |
| 10 (C) | Profits gained from newly settled undertakings in IIDC or IGC in the North-Eastern region for up to 10 years |
| 10 (15) (i) (iib) (iic) | Interest income or premiums or any other payments on bonds, securities, capital investment bonds etc. |
| 10 (15)(iv)(h) | Interest payment on bonds and debentures by public sector companies |
| 10 (15) (iv) (i) | Interest paid by the government on savings of Central or State Government employees upon their retirement |
| 10 (15) (vi) | Interest earned on gold deposit bonds |
| 10 (15)(vii) | Interest earned on local authority’s bonds |
| 10 (5) | Leave travel allowances |
| 10 (5B) | Tax paid by an employer for income received by a technician whose service should have started from March 1, 1993 |
| 10 (7) | Allowances and benefits provided to an employee serving abroad by the government |
| 10 (8) | Income earned from foreign governments under cooperative technical assistance programme |
| 10 (10) | Amount of death-cum-retirement gratuity under Section 2, 3 and 4 of the Gratuity Act, 1972 |
| 10 (10A) | Accumulated pension in lieu of monthly pension received by a government employee |
| 10(10AA) | Leave encashment of unused paid leaves of an employee of Central Or State Government which amount up to 10 months of salary or Rs. 1,35,360 whichever is lower |
| 10 (10B) | Retrenchment Compensation of amount under Section 25 F(b) of Industrial Dispute Act or as announced by the government, whichever is lower |
| 10 (10C) | Compensation received upon voluntary retirement or termination; maximum amount limit is Rs. 5 lakh |
| 10 (11) | Income received under Provident Fund Act, 1925 or other government notified bonds |
| 10 (12) | Payment earned from recognised provident fund under rule 8 of Part A of 4th Schedule |
| 10 (13) | Income earned from authorized superannuation fund |
| 10 (13A) | House rent allowance |
| 10 (14) | Special allowances or benefits provided to perform your duties |
| 10 (18) | Family pensions of recipients of gallantry awards |
Final Word
Income tax calculators are highly beneficial tools for taxpayers as they provide accurate results. One can easily use any of the income tax calculators available online for generating error-free results without paying any charges. Make sure to provide all the necessary details in the income tax calculator to compute your income tax liability for a specific financial year.
FAQs
Ans: If you are a salaried individual, you can avail tax exemptions under the following sections:
• 80D (for health insurance premiums)
• 80E (for education loan interest)
• 80TTA (for savings account interest)
• 80C, 24B and 80EE (for home loan repayment)
• 80G (for donations to charitable trusts)
• 80GG (for paying house rent)
Ans: Yes, you can use the online tax calculator on the IT Department website. Here’s what you need to:
• Go to the official portal of the Income-tax Department.
• Now, go downwards and find the ‘Important Links’ options. Click on it and then choose ‘Tax Calculator’.
• You will get redirected to a new page.
• Provide the necessary details in the relevant fields and check your tax liability.
Ans: You will require these details while filing for income tax online:
• PAN, Aadhaar details
• Details of all bank accounts that you had in a particular financial year
• Income proofs, for example, bank account statements and salary slip
• Deductions that you claim under Section 80 of the Income Tax Act, 1961
• Details about TDS or advance tax payments
Ans: You can claim tax benefits of up to Rs. 1.5 lakh under Section 80C for each financial year. But, individuals can claim an additional deduction of up to Rs. 50,000 for the amount they deposit into their NPS account.
Section 80C applies to deductions for investments such as EPF, PPF, ELSS, FDs, home loan principal payment, LIC premiums and others. This exemption limit of Rs. 1.5 lakhs is inclusive of 80CCC, 80CCD(1) and 80CCD(2).
Ans: Here are some of the essential terms about the income tax that every taxpayer should be aware of:
• Financial year: The period between 1st April of the current year and 31st March of the following year is termed as a financial year.
• Assessment year: When earnings of a particular financial year are assessed in the following financial year, it is termed as an assessment year.
• Deduction: A deduction is a certain reduction in your total taxable income based on various Sections of the Income Tax Act, 1961 such as 80C, 80E, 80G and others.
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This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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