Income Tax Calculator For FY 2022-23

Online Income Tax Calculator for - FY 2022-23

The income tax you pay plays a pivotal role in the country's development. It is an important source of revenue for any government. Whether you are working for a company or run a business, it is imperative for you to pay tax on your income and file a return every year. The tax amount depends on several parameters like your income and the source,your age, exemptions and deductions based on eligible investments.
Let us see how this works in detail.

Sources of Income & Calculation of Gross Income

Income is classified into five categories:

• Income from Salary: This is the monthly income one receives from the employer they work for. The salary amount can include these components:

• Basic Salary
• Dearness Allowance (DA)
• Annuity & gratuity benefits, if paid in that financial year
• Allowances on transport, medical expenses etc.
• Special Allowances, if any

The aggregate of the above-mentioned incomes is called Gross Salary.

• Income from Business or Profession: The income that one earns through business or profession is also taxable.
• Income from capital gains: Any profit or gain that arises from sale or transfer of capital assets (such as stocks, Mutual Funds, Real estate etc.) is taxable under the head capital gains. This gain is further categorized as Short- Term Capital Gains (STCG) and Long- Term Capital Gains (LTCG).
• Income from rent on House property: The next head - Income from House property - includes any rental income that an individual earns from a residential or commercial property and is subject to taxation.
• Income from other sources: Any income that can't be bracketed under the other four heads of income will come under the head income from other sources.

All above components put together constitute your Gross Income.

The Two Income Tax Regimes

Until FY 2019-20, there was only one income tax regime in India. Under this system, tax rates were applicable to people based on their gross income and age. There were multiple exemptions and deductions available under this regime. However, in the 2020 Budget announcement, the Indian Finance Minister Nirmala Sitharaman announced a new tax regime for investors. Under the new system, there would be more tax slabs and lower tax rates. But you should note that there would be no exemptions or deductions under the new system.

The Finance Minister also announced that the new tax system is not compulsory. As a taxpayer, you can migrate to the new system if it offers you better advantages. Otherwise, you can continue paying your annual taxes through the old system.

Tax deductions under different sections of the Income Tax Act

As the name suggests, tax deductions help to save tax on your total income. One can claim a tax deduction on the money he/she spends on medical expenses or on charity. There are certain investments that help you bring down tax - these include life insurance plans, health insurance plans, retirement schemes or even NSC. Here are the sections under which one can claim tax deduction:

• Section 80C: Under this section, all investments made towards ELSS Mutual Funds, Tax saving Fixed Deposits, Term Life Insurance Premium, Pension Schemes, Provident Fund etc. are eligible for tax deduction. Maximum available deduction unders section 80C is ₹1,50,000/-.
• Section 80 CCD: This section encourages investments in two pension schemes - Atal Pension Yojna (APY) & National Pension Scheme (NPS). This section has been further divided into two sub sections: 80CCD(1) & 80CCD(2). Under the provisions of section 80CCD(1):

• One can claim a maximum deduction up to 10% of basic salary + dearness allowance.
• Additional benefit of up to ₹50,000/- has been granted under section 80CCD(1B), post a new amendment in union budget of 2015 - 16.

Furthermore, sub section 80CCD(2) allows employer's contribution to Pension Schemes subject to a maximum of 10% of basic salary + dearness allowance, to be claimed as a tax benefit. This limit is over and above the limit prescribed under 80CCD(1).

• Section 80D: Under this section, the premium paid towards a health insurance policy can be claimed as a tax deduction. Premiums for health insurance for self, spouse & dependent children (family) and parents can be claimed as a deduction. However, the maximum allowed deduction for self & family is ₹25,000 per year. Deductions on premium for health insurance of parents are allowed to a limit of up to Rs.25,000 if they are less than 60 years of age or Rs.50,000 if any or both of the parents are over the age of 60 years.

In addition to the above sections, one can claim tax benefits on Interest paid on Education Loan (Section 80E) & Home Loan (Section 24), Donations made to charity (Section 80G). Read ET Money's Tax Saving Guide & learn about the best ways to Save Income Tax in FY 2019-20.

Income tax slabs in India

Income taxpayers (both salaried & self employed) have been categorized into three age groups:

1. Individuals who are below the age of 60 years
2. Senior citizens who are between 60 years and 80 years old.
3. Super senior citizens who are above 80 years old.

Tax Rates for Individuals as per budget 2019-2020 (the old regime)

Tax Rates for Senior Tax Payers between the age of 60 years to 80 years old

Tax Rates for Super Senior Taxpayers above the age of 80 years

Tax exemptions available for tax benefits

• Standard exemption: Post union budget 2019-20, a standard exemption of ₹50,000/- is available to all individuals irrespective of their income. Pre budget 2019-20, the limit of standard exemption was ₹40,000/-.
• HRA exemptions under Section 10: Any individual who lives in a rented house can also avail tax exemption under section 10. HRA computation for salaried individual is the minimum of-
  

• The actual HRA received from employer
• 50% of the basic salary & dearness allowance for individuals living in metro cities, 40% of the same for individuals living in non-metro cities
• Actual rent paid less 10% of basic salary & dearness allowance

Self-employed individuals can claim actual rent paid or ₹60,000/-, whichever is less as deduction under Section 10. To claim deductions, one needs to submit various proofs like Rent Agreement, Receipts of rent paid, Pan of landlord. Use ETMONEY's Rent Receipt Generator for free rent receipts required for HRA exemptions.

Tax deductions under different sections of the Income Tax Act

As the name suggests, tax deductions help to save tax on your total income. One can claim a tax deduction on the money he/she spends on medical expenses or on charity. There are certain investments that help you bring down tax - these include life insurance plans, health insurance plans, retirement schemes or even NSC.

Here are the sections under which one can claim tax deduction:

• Section 80C: Under this section, all investments made towards ELSS Mutual Funds, Tax saving Fixed Deposits, Term Life Insurance Premium, Pension Schemes, Provident Fund etc. are eligible for tax deduction. Maximum available deduction unders section 80C is ₹1,50,000/-.
• Section 80 CCD: This section encourages investments in two pension schemes - Atal Pension Yojna (APY) & National Pension Scheme (NPS). This section has been further divided into two sub sections: 80CCD(1) & 80CCD(2). Under the provisions of section 80CCD(1):

• One can claim a maximum deduction up to 10% of basic salary + dearness allowance.
• Additional benefit of up to ₹50,000/- has been granted under section 80CCD(1B), post a new amendment in union budget of 2015 - 16.

Furthermore, sub section 80CCD(2) allows employer's contribution to Pension Schemes subject to a maximum of 10% of basic salary + dearness allowance, to be claimed as a tax benefit. This limit is over and above the limit prescribed under 80CCD(1).

• Section 80D: Under this section, the premium paid towards a health insurance policy can be claimed as a tax deduction. Premiums for health insurance for self, spouse & dependent children (family) and parents can be claimed as a deduction. However the maximum allowed deduction for self & family is ₹25,000 per year. Deductions on premium for health insurance of parents are allowed to a limit of up to Rs.25,000 if they are less than 60 years of age or ₹50,000 if anyone or both of the parents are more than 60 years old.

In addition to the above sections, one can claim tax benefits on Interest paid on Education Loan (Section 80E) & Home Loan (Section 24), Donations made to charity (Section 80G). Read ETMONEY's Tax Saving Guide & learn about the best ways to Save Income Tax in FY 2019-20.

Tax rates for individuals as per budget 2020-21 (the new regime)

Income tax for individuals (both salaried & self-employed) have been categorized into three categories of taxpayers:

1. Individuals who are below the age of 60 years
2. Senior citizens who are between 60 years and 80 years old.
3. Super senior citizens who are above 80 years old.

Tax Rates for Individuals as per budget 2019-2020 (the old regime)

Under the old system, income between ₹5 lakh and ₹10 lakh was uniformly taxed at a flat 20%. But under the new tax system, income between ₹5 lakh and ₹7.5 lakh will be taxed at 10%. Income between ₹7.5 lakh and ₹10 lakh will be taxed at 15%

Similarly, income above ₹10 lakh was taxed at 30% but under the new regime, it has been split into three parts. For income between ₹10 lakh to ₹12.5 lakh, the tax rate is 20%. For income between ₹12.5 lakh to ₹15 lakh it is 25% and for income above ₹15 lakh, the tax rate is 30%.

You should also note that the new tax regime treats all taxpayers equally. There is a uniform tax slab for taxpayers across all ages (this includes taxpayers under the age of 60, senior citizens and super senior citizens). And as mentioned earlier, there are no tax deductions or exemptions under the new tax regime.

The new tax regime is applicable from Assessment Year 2022-23.

Here is a side by side comparison of the old and new tax rates

How to use ET Money Income Tax Calculator

Following are the steps to use the online tax calculator:

For Salaried Individuals:

• Step 1: Choose your age bracket, then select your residence city type, residence type and occupation.
• Step 2: Enter your salary details - basic salary, HRA, dearness allowance, special allowance and employee EPF contribution.
• Step 3: Next, add other income details - Income from Interest on Savings, Income from Rentals, Income from Deposits and lastly, income from all other sources.
• Step 4: Add both Long Term & Short Term Capital Gains for all capital assets like Stocks, Mutual Funds, Real estate etc. To understand taxation on all types of Mutual Funds, read our blog- How Your Mutual Fund Investments are Taxed?
• Step 5: List down other deductions under Section 80C, 80D and 80CCD.
• Step 6: Once you click "Calculate", the income tax calculator will automatically calculate the tax you need to pay under the old tax regime and the new tax regime. What's more, the tax calculator will automatically recommend which tax regime you should opt for in order to reduce your tax outgo.

For Self-employed Individuals:

If you are self-employed and you want to calculate the income tax you need to pay, here are the steps you must follow in the online tax calculator:

• Step 1: Choose the financial year for which you want your taxes to be calculated and select your age accordingly, then mention the residence city type, residence type and occupation. Since self-employed tax payers do not have a HRA component in their income, the tax calculator has an in-built HRA calculator online to automatically calculate exemption under Section 80GG.
• Step 2: Enter your income details - gross income, income from interest on savings, income from rentals, interest from deposits, income from other sources.
• Step 3: Add income from capital gains. Enter all non equity short term capital gains post indexation benefits. To understand taxation on all types of Mutual Funds, read our blog- How Your Mutual Fund Investments are Taxed?
• Step 4: List down other deductions under Section 80C, 80D and 80CCD. Self employed individuals can also get tax benefits on expenses related to work or business by submitting valid expense proofs while filing tax.
• Step 5: Once you click "Calculate", "the income tax calculator will automatically calculate the tax you need to pay under the old tax regime and the new tax regime. What's more, the tax calculator will automatically recommend which tax regime you should opt for in order to reduce your tax outgo.

With this taxable income calculator, you can quickly know how much income tax you need to pay!