Income Tax Computation

Step 1: Open the Income Tax Calculator

Step 2: Fill in basic details

Step 3: Key in your Earnings

Copy the earnings from your pay slip to appropriate salary heads listed.

If a salary head is not listed, you should key in the value under ‘Other Allowance’.

Step 4: Key in your Deductions

Copy the deductions from your payslip to appropriate salary heads.

If a salary head is not listed, you should key in the value under ‘Other Deduction’.

Step 5: Make changes to Earnings and deductions

I’m paying house rent of Rupees 15000 per month. But, as I haven’t declared it, the HRA exemption is calculated as zero.

If your salary has changed during the financial year, you can make changes here.

Step 6: Compute Income Tax to calculate Tax Liability

As you see, the Tax Liability in Old regime is INR 68752 and liability in new regime is INR 61838. You are recommended to choose New regime as it provides a benefit of INR 6914.

Step 7: View Calculation Summary

Over here, you will know how the Tax liability is calculated from the data you provided.

Step 8: Investment Declarations

Now, let’s declare the investments that you have made or are about to make. The investment declarations can bring down the tax liability.

Step 9: Investment Summary

As you can see you have an opportunity to invest INR 54000 in Section 80C, which will bring down your tax liability further.

Step 10: Compute Income Tax again

This time the investment declarations will also be taken in to consideration while calculating tax liability.

As you see, the tax liability in Old regime was INR 64592 and it has come down to INR 50731. Also, the tax liability in old regime is now lesser than new regime, so, you are recommended to choose the Old regime now.