How to save income tax using the Income Tax Calculator

Step 1: Open the Income Tax Calculator

Step 2: Fill in basic details

Step 3: Key in your salary details

Step 4: Compute Income Tax

As you see, I’ve a total tax liability of INR 85800 if I choose the old regime.

But, as per the new regime my tax liability is INR 41600 , and I get a benefit of INR 44200 if I choose the New Regime.

Now, I’m going to declare my investments , and claim exemptions to bring my income tax down to zero under the old regime.

Step 5: Declare House Rent

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

Now, let me add the declaration.

Step 6: Compute income tax again

As you see, I’ve now got an HRA exemption of Rupees 129000.

So, my total tax liability is Rupees 58968 if I choose the old regime.

Step 7: Declare deductions under Section 80C, 80D, 80E, and so on

I’ve invested Rupees 80000 in Life insurance Policy. Let me declare that.

Step 8: Compute income tax again

As you see, my total tax liability has come down to Rupees 42328.

Step 9: Declare investment on Home Loan

The principal part of my home loan is Rupees 80000 and interest is Rupees 150000 for this financial year. Let me declare that.

Step 10: Compute income tax again

As you see, my total tax liability has come down to zero.