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How to Calculate Income Tax?

Estimating your taxes before you file your tax return is an essential part of tax planning. However, income tax computation requires good knowledge of taxation laws:( Thus, looking at the hardships faced by people, we created a simple online tax calculator tool to help you easily estimate your tax refund or tax payable to the government. Our income tax calculator calculate taxes, on the basis of latest provisions of the income tax act and rules issued by the Income Tax Department.

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What is Income Tax Calculator?

The Income Tax Calculator is an easy-to-use online tool that lets you estimate your taxes based on your income. We've updated our tool to reflect the proposed income tax adjustments in the Union Budget for 2023-2024.

How Does Income Tax Calculator Work?

Tax2win’s income tax calculator works on the basis of input provided by the user.

Step 1: Enter the basic details such as name, email address, income source.

Step 2: On the next screen, enter your income details such as income from salary, rental income, etc.

Step 3: Click on Next and enter your income from other sources.

Step 4: Enter the deductions that are applicable to you

Step 5: Click on Calculate and you will see how much income tax you will have to pay.

Note: Whichever field is not applicable, you can enter "0"

How To Calculate Income Tax?

Calculation for Salaried person
The sum of Basic pay + HRA + Special Allowance + Transport Allowance + any additional allowance and components is the total salary of an individual. Out of this salary, some aspects of your compensation, such as leave travel allowance, HRA, etc., are exempt from income tax. So, to calculate your total income tax, it is essential that you have your salary slips with you and know all the components of your salary. Further, you should have all the documents related to your investment handy to calculate your taxes after taking into account the available deductions and exemptions.

Let’s understand how to calculate taxes using both new and old tax regimes with the help of an example:-

  • Income from Salary after HRA and LTA benefit - 9,20,000
  • Income from Other Sources - 20,000
  • Deduction u/s 80C - 1,50,000.
  • Deduction u/s 80D - 25000
  • Deduction u/s 80CCD(1B) - 50000.
  • So, total taxable income would be 6,65,000
Salary Components Amount Deduction allowed
Basic Salary 800000 -
HRA 320000 200000
LTA 10000 10000
Total CTC 1130000 -
Other income 20000 -
80C 150000 -
80D 25000 -
80CCD(1B) 50000 -

Tax calculation as per old regime

Salary income Amount
Basic 800000
HRA 320000
LTA 10000
Total CTC 1130000
HRA 200000
LTA 10000
Std. deduction 50000
Net taxable salary 870000
Other income 20000
Gross total income 890000
80C 150000
80CCD(1B) 50000
80D 25000
Total deduction 225000
Net taxable income 665000
Total tax on above 47320
Upto 250000 Upto nil
250000 to 500000 12500
balance 165000 33000
Total 47320

Tax calculation as per new regime

Salary income Amount
Basic 800000
HRA 320000
LTA 10000
Total CTC 1130000
Net taxable salary 1130000
Other income 20000
Gross total income 1150000
Net taxable income 1150000
Total tax on above 109200
Up to 250000 nil
250000 to 500000 12500
500000 to 750000 25000
750000 to 1000000 37500
balance 150000 30000
Total tax 105000
Health & Education [email protected] 4% 4200
Total 109200

Eligibility Criteria for Using Income Tax Calculator

Anyone who is earning a salary or has any income source and is a resident of India can use this calculator to calculate their income tax.

FAQs on Income Tax Calculation in India

Q What is income ?

Income means the amount that an individual earns in exchange for providing goods or services.In other words, income is the sum of all the wages, salaries, profits, interests payments, rents, and other forms of earnings received for a period of time.

For the purpose of taxation, income has been categorized into five heads :

  • Income from Salary. For details please click here
  • Income from House Property. For details please click here .
  • Income from Profit & Gain of Business & Profession
  • Income from Capital Gain
  • Income from Other Sources

Q What is income tax ?

An income tax is a direct tax that is imposed on the assessee depending upon their respective income or profit. In other words, it is the tax levied on the income earned.

Q When income tax is required to be paid?

Income Tax is required to be paid when your income exceeds the Basic Exemption Limit. This limit is specified by the government every year. The basic exemption limit is Rs.2.5 lakhs only. However, there is a rebate of Rs 12500 available u/s 87A for income less than 5 lakhs.

Q What is the period for which tax is calculated?

Tax is charged on every income earned during the period April 1- March 31. The year in which the income has been earned is known as the ‘previous year’ and the year in which the tax is calculated is known as the ‘assessment year’.

Q What are the benefits of tax calculation beforehand?

You should calculate Taxes beforehand so that you are able to set aside the funds which you will be needing for paying taxes at the time of filing a return. Therefore, at the time of return filing, you don’t have to rush for arranging funds. The other benefit is, it lets you know whether your taxes will go up or down in comparison to the previous year.

Q How to calculate income tax in India?

In India, income tax is calculated on the basis of tax rates and slabs defined by the Finance Ministry in the budget which is presented every year.

Q What are the income tax slabs and rates?

The Slab helps to determine the tax rate at which tax will be levied upon you. Earlier, Government has determined various Income Tax Slabs on the basis of the age of the individual. Budget 2020 has given the individuals options to choose between a new tax slab and the older tax slabs.

Old Income Tax Slab
Up to Rs 2,50,000 NIL
Rs 2,50,001 - Rs 5,00,000 5% (tax rebate u/s 87A is available)
Rs 5,00,001 - Rs 10,00,000 20%
Above Rs 10,00,000 30%
New Tax Regime
Up to Rs 2,50,000 NIL
Rs 2,50,001 - Rs 5,00,000 5% (tax rebate u/s 87A is available)
Rs 5,00,001 - Rs 7,50,000 10%
Rs 7,50,001 - Rs 10,00,000 15%
Rs 10,00,001 - Rs 12,50,000 20%
Rs 12,50,001 - Rs 15,00,000 25%
Above - Rs. 15,00,000 30%

Please note that from F.Y 18-19, EC & SHEC has been replaced by the Health & Education [email protected] 4%.

Further, for understanding the other slabs of various taxpayers, please click on this link.

Q What is TDS? How to calculate the monthly TDS?

Tax Deducted at Source (TDS) is a mechanism whereby the tax is deducted directly at the point of origin of income and deposited to the government. It enables speedy collection of taxes. You can claim this tax paid as a credit while filing your income tax return by claiming tax deductions. In the case of salary income, it is the responsibility of your employer to deduct the TDS and deposit it to the government.

For the purpose of calculation of monthly TDS amount, just calculate your taxes from the above calculator and divide it by 12. You will get your monthly TDS amount.

For example: From the above calculator the total tax has been computed at Rs. 60,000 and now for the purpose of monthly TDS we shall divide Rs. 60,000 by 12. Hence, monthly TDS shall be Rs.5,000

Q How does the government collect income tax?

The government collects the revenue in the form of income tax in 3 ways:

  • Voluntary payment by the taxpayers like Advance Tax and Self-Assessment Tax.
  • Tax Deducted at Source (TDS) which is deducted at the point of origin of your income even before receiving it.
  • Taxes Collected at Source (TCS)

Q Does this Income tax calculator computes my final tax liability?

Yes, it computes your tax liability on the basis of information entered. You can surely use the same for your tax calculation for 2021-22 and 2022-2023. Your Income-tax liability will be more or less same, subject to the actual information.

Q Why should i use an online tool for Income Tax Calculation?

With the help of an online tool it becomes easy to estimate your tax payment for the year. You can use the calculator by Tax2win. It is a quick, simple and user-friendly way of estimating how much your income tax liability and provides you with fast and accurate calculation.

Q What are the changes made in income tax rate after financial year 2018-2019?

There has been no change in the existing income tax rate from financial year 2018-2019 except the abolishment of EC & SHEC and introduction of Health & Education Cess. For Expert opinion , you could also approach us and avail our CA Assisted services.

Q How to calculate Income-tax for FY 2021-22 & 2022-2023 (i.e, AY 2022-23 & 2023-2024) using Tax2win?

Please follow the below given steps to calculate your income tax through Tax2win portal and there you are with the the tax calculation:

  • Click on this link or visit the income tax calculator online page of Tax2win.
  • Fill all the details as required for tax calculation.
  • Click on "Calculate".

Q What is rebate under section 87A of the income tax?

Rebate u/s 87A provides exemption on tax payment to a RESIDENT INDIVIDUAL. As per this provision, if an individual’s taxable income is upto Rs. 5 lakhs then he will get the tax benefit of Rs. 12,500 or the amount of tax whichever is lower. If you are liable to pay tax upto the limit of rebate allowed, then after taking the rebate benefit, no payment will be required to be made for tax amount. For availing the full amount of rebate, the Total Taxable Income of return filer shall be upto Rs 5,00,000. Read more: https://tax2win.in/guide/section-87a

Related article: https://tax2win.in/guide/income-tax-slabs

We hope our free income tax calculator india was able to help you in calculating your income tax payable or refund.
Also, if you want a HRA calculator for AY2022-23 & AY 2021-22, visit our online free HRA calculator page.