What is Taxable Income?
To calculate Taxable Income and to learn how it is calculated, follow the steps below. We are using an Income Tax Calculator to calculate Taxable Income with data from your payslip and the tax saving investments you have made.
Step 2: Fill in the basic details
Step 3: Key in your salary details
Copy the earnings and deductions from your payslip to appropriate salary heads listed.
Step 4: Compute Income Tax
Step 5: Taxable Income
View calculation summary for details on how the Taxable Income is calculated.
Step 6: Taxable Income in New Regime
In New Regime of Income Tax, Taxable Income is calculated as
Gross Salary + Bonus + Other income – Standard Deduction – Deductions under Chapter 6A
Step 7: Calculation of Taxable Income in New Regime
Gross Salary is the total earnings from your payslips.
Bonus is an annual payment received from your employer.
If you have any other income besides your salary, you should declare it.
Standard Deduction is a deduction provided to all by the income tax authority.
If your employer is contributing to your NPS account, you are eligible for deduction under Section 80CCD(2) which is under Chapter 6A.
Step 8: Taxable Income in Old Regime
In Old Regime of Income Tax, Taxable income is calculated as
Gross Earnings + Bonus – Professional Tax – Standard Deduction – Exemptions under section 10 & 17 + Other income – Deductions under Chapter 6A – Housing Loan interest.
Step 9: Calculation of Taxable Income in Old Regime
If Professional Tax appears on your pay slip, it will be exempted.
If you want to claim exemptions under Section 10 & 17 you should declare it under the declarations section.
Similarly, you should make declarations against Chapter VIA
You can also declare your Housing Loan interest under Section 24(b) and Housing Loan principal under Section 80C.
Step 10: Taxable Income with Declarations
Let’s compute tax again with the declarations made
As you see, the calculator takes care of each declaration and puts them under respective heads.
The income tax calculator helps you understand the tax calculation process and also helps you save tax by letting you experiment your investment declarations. The income tax calculator advises you on how to save maximum tax.
Leave A Comment
You must be logged in to post a comment.