Every year, as March approaches, most of us start worrying about our income tax returns. From saving bills for deductions to wondering, “Have I saved enough under 80C?” or “How will this bonus affect my tax slab?.” Every rupee saved matters—whether it’s for rent for an apartment, school fees, home loans, car loans or our daily expenses. With constantly changing tax laws and varying income levels, it’s hard to predict the impact accurately. At one point or another, we often think, “Could I do the income tax calculation myself?” This is where you should use an income tax calculator.
Now, how can you do income tax calculations with an IT calculator?
Let us see!
Income Tax Calculation and Tax Slabs
The Indian tax system offers two regimes – old and new – allowing taxpayers to choose the structure that best suits their financial goals.
Filing income tax returns on time enables you to claim income tax refunds.
Here’s a table comparing the income tax slabs for the old and new regimes as per the Budget 2024:
| Income Range | Old Regime (FY 2024-25) | New Regime (FY 2024-25) |
| Up to ₹2.5 lakh | Nil | Nil |
| ₹2.5 lakh – ₹3 lakh | 5% | Nil |
| ₹3 lakh – ₹5 lakh | 5% | 5% |
| ₹5 lakh – ₹7.5 lakh | 10% | 5% |
| ₹7.5 lakh – ₹10 lakh | 15% | 10% |
| ₹10 lakh – ₹12.5 lakh | 20% | 15% |
| ₹12.5 lakh – ₹15 lakh | 25% | 20% |
| Above ₹15 lakh | 30% | 30% |
Key Differences:
- New Regime: Offers lower tax rates but does not allow most exemptions and deductions.
- Old Regime: Allows various exemptions and deductions, which can reduce taxable income.
Additional Benefits under New Regime:
- Rebate: Up to ₹25,000 (if income ≤ ₹7,00,000).
- Standard Deduction: Raised to ₹75,000.
Now, how to calculate income tax?
Here is the step-by-step process that is usually followed:
- Determine Your Gross Income: Your gross income includes your salary, bonuses, and any other taxable income.
- Identify Exemptions: Certain components of your salary, like House Rent Allowance (HRA) and Leave Travel Allowance (LTA), may be exempt from tax.
Also, a standard deduction of ₹75,000 is available under the new tax regime. You must identity and use them while filling for income tax return.
- Calculate Taxable Income: Now, you must subtract the exemptions and deductions from your gross income to get your taxable income.
- Apply Tax Rates: The tax rates for the new regime are:
- Up to ₹3 lakh: NIL
- ₹3 lakh to ₹7 lakh: 5%
- ₹7 lakh to ₹10 lakh: 10%
- ₹10 lakh to ₹12 lakh: 15%
- ₹12 lakh to ₹15 lakh: 20%
- Above ₹15 lakh: 30%
- Add Surcharge and Cess: If applicable, add any surcharge and health and education cess (4% of the income tax).
However, to avoid all of the above processes of manually income tax calculation, you must use an (Income Tax) IT calculator!
What is the Income Tax Calculator?
An income tax calculator is an online tool that helps you figure out how much tax you owe based on your income. It can also show you a comparison between the old and new tax systems, helping you choose the one that suits you better. You can also use the income tax calculator new regime to reflect the changes proposed in the Union Budget 2024-25.
Using Income Tax Calculator for FY 2024-25 (AY 2025-26) and FY 2023-24 (AY 2024-25)
You have to follow these steps for income tax calculation:
- Pick the financial year for which you need to calculate taxes.
- Select your age group, as tax rules differ for various age categories under the old system.
- Now, you must fill in your taxable salary.
- Next, add other income details like interest, rental income, and home loan interest.
- The next thing is to enter the exemptions like HRA and LTA if you want to use the old tax slabs.
- The last step is to click on calculate.
This is a simple process you can follow while using income tax rate calculator.
How to Calculate Income Tax on Salary
To calculate your income tax, you must include all sources of income like:
- Salary
- House Property
- Capital Gains
- Business/Profession
- Other Sources
For salaried individuals, income from salary includes basic salary, House Rent Allowance (HRA), special allowances, and other benefits. Some parts of your salary, like reimbursements or Leave Travel Allowance (LTA), may be tax-exempt. If you live in rented accommodation, you can claim HRA exemption, and there’s a standard deduction of ₹50,000 (₹75,000 under the new regime from the latest budget).
Old vs New Tax Regime
Let’s assume Manisha earns ₹90,000 per month as her basic salary, ₹40,000 as HRA, ₹15,000 as a special allowance, and ₹12,000 annually as LTA. She lives in Mumbai and pays ₹35,000 as rent each month.
Here’s how his taxable income would look under both regimes:
| Income Source | Amount | Exemption (Old) | Taxable Income (Old) | Taxable Income (New) |
| Basic Salary | ₹10,80,000 | – | ₹10,80,000 | ₹10,80,000 |
| HRA | ₹4,80,000 | ₹2,88,000 | ₹1,92,000 | ₹4,80,000 |
| Special Allowance | ₹1,80,000 | – | ₹1,80,000 | ₹1,80,000 |
| LTA | ₹12,000 | ₹8,000 | ₹4,000 | ₹12,000 |
| Standard Deduction | – | ₹50,000 | ₹50,000 | ₹75,000 |
| Total Income | – | – | ₹14,06,000 | ₹17,47,000 |
Step 1: Calculate Other Income
Manisha also earns ₹10,000 in interest from her savings account and ₹15,000 from fixed deposit interest. She also makes investments under the old tax regime, such as ₹75,000 in PPF, ₹25,000 in ELSS, and ₹10,000 in life insurance premiums, along with medical insurance of ₹15,000.
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Step 2: Old Tax Regime Deductions
| Section | Maximum Deduction | Investment Made | Amount Claimed |
| Section 80C | ₹1,50,000 | PPF, ELSS, Life Insurance | ₹1,10,000 |
| Section 80D | ₹25,000 | Medical Insurance | ₹15,000 |
| Section 80TTA | ₹10,000 | Savings Interest | ₹10,000 |
Step 3: Gross Taxable Income Calculation (Old Regime)
| Income Source | Amount |
| Salary | ₹14,06,000 |
| Less: Deduction | ₹50,000 |
| Other Income | ₹25,000 |
| Gross Income | ₹14,31,000 |
| Less: Deductions | ₹1,35,000 |
| Taxable Income | ₹12,96,000 |
| Total Tax | ₹1,79,280 |
Step 4: Gross Taxable Income Calculation (New Regime)
| Income Source | Amount |
| Salary | ₹17,47,000 |
| Less: Deduction | ₹75,000 |
| Other Income | ₹25,000 |
| Gross Income | ₹16,97,000 |
| Total Tax | ₹2,53,640 |
Benefits of Using an Income Tax Calculator
Using an income tax calculator online offers several advantages:
- An income tax calculator gives you precise results without the errors that can happen with manual calculations. It helps you avoid mistakes.
- You can calculate your income taxe quickly, anytime, and from anywhere. There’s no need to schedule time for complicated tax calculations.
- An income tax return calculator is easy to use and free. You just enter your income and personal details to get a quick estimate of your tax liability.
- Once you know your tax amount, you can plan the finances the year in a better manner.
By comparing the old and new tax regimes, this tool makes tax planning easier and more effective.
Start using an income tax calculator today to manage your taxes and savings better!
You may also want to know the NSC Calculator
FAQs| Income Tax Calculator
The better regime depends on individual circumstances, such as income level and available deductions. The new regime offers lower rates but fewer deductions. However, it offers a deduction of ₹75000.
You can calculate taxable income under both regimes, apply respective tax rates, and compare the total tax payable to see which is more beneficial.
No significant changes were made to the old income tax slabs in the 2024 budget; they remain the same as the previous year.
The new tax regime does not allow most exemptions and deductions, which can be a disadvantage. However, it allows a standard deduction of ₹75000.
To do income tax calculations, you can use the income tax calculator online, fill in your income and deductions to get your income tax amount in advance.
If your income is below the exemption limit, you don’t have to file income tax return. But if you want to claim a refund, you must file.
No, the IT calculator only calculates your total tax liability.
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