Income Tax Calculator

Introduction to Income Tax Calculators

For the uninitiated, it can take some time to get familiar with Income Tax. The first step is to comprehend the terminologies with some effort and make yourself familiar with the processes involved. Eventually, it does get very easy, to the point that you can file your own returns! Income Tax is often viewed with a lens of unease and discomfort that most people rely on professional assistance while filing their annual returns, but it doesn't have to be so.

Knowing the ins and outs of Income Tax can help you plan your finances better. Money saved is money earned. Keep in mind that you need to start saving for huge lifestyle expenses like buying a house, annual vacations, children's education, marriage, and eventually - retirement. There are numerous ways to save money; one of them is undoubtedly through Income Tax Deductions and Exemptions. But with new changes to Income Tax every year, it can be a task to calculate your taxes.

Fortunately, a simple solution to calculate how much you can save on income tax is Manipal Cigna's Income Tax Calculator. This online tool can help determine how much money you will be paying as tax after deducting your various tax-saving investments. With a little thought and research, this income tax calculator can also help you understand what types of investments you can make to bring down your taxable income to meet your financial goals.

Calculating your income tax using our online tax calculator is simple. Before diving into how to use it, let us familiarize ourselves with some basic Income Tax glossary.

Important Terms and Definitions in Tax Calculation

● Assessment Year: Assessment Year in Income Tax is the period in which the income tax department assesses your Income & Dividend from a specific financial year. The income tax assessment year starts on April 1st and ends on March 31st next year.

● Financial Year: Financial year is the 12-month period in which your financial statements are prepared. The financial accounting year begins on April 1st and ends on March 31st.

● Previous Year: Previous Year is the financial year in which the assessee earns their income. It is the fiscal year before the current assessment year. You file your returns for the previous year.

● Deduction: Tax deduction is a taxable reduction in your total income and is commonly a result of certain expenses like life insurance premiums, defined under section 80 and Chapter VI-A of the Income Tax Act, 1961.

● Exemptions : The various income tax exemptions for salaried individuals are House Rent Allowance (HRA), Leave Travel Allowance (LTA), Leave Encashment, Pension Income, Gratuity, Voluntary Retirement Scheme (VRS) Amount from employer, Children’s Education Allowance, Travel Allowance, etc

What are different sources of income?

As per the Income Tax Department, the following are defined as sources of income:

● Income from Salary: Income from salary constitutes wages, annuity, gratuity, leave encashment, profits, annual accretion, commission and fees, pension, any contribution to the employees' pension account, and transferred balance in the recognized Provident Fund.

● Income from House Property: If there is a let-out property under "Income from House Property," a taxpayer can claim a deduction under section24(b) on interest on loans at the time of computing chargeable income. The loan could be taken for purchase, construction, repair, reconstruction, or renewal of the property.

● Income from Capital Gains: Capital gains which are the profit received through the sale of a capital asset, fall under the taxable income category. This capital gains tax can either be long-term or short-term.

How to use our Income Tax Calculator online?

Now that we have a basic understanding of Income Tax Terms, you can start using the Online Tax Calculator in three easy steps:

● Step #1: Enter your particulars like name, date of birth, contact details, and city of residence

● Step #2: Enter your income details like salary, rent paid (if any), other allowances, deductions u/s 16, and income from various other sources.

● Step #3: Enter all deduction details across various chapters and contributions.

The calculator will output the amount to be paid as income tax in the current fiscal year. The amount will be calculated considering which income slab you fall into as per the latest tax regime defined by the Government of India.

Income Tax slabs you should be aware of based on your age

(Note that an additional cess is levied on the income tax amount and goes towards funding developmental schemes in Public Healthcare and Education. Additionally, a surcharge is applicable if you earn in excess of ₹50 lakhs)

● For individuals below the age of 60

● For individuals between the age of 60 and 80

● For individuals aged above 80

What are the eligibility criteria for filing Income Tax Returns?

All individuals with taxable income (in any of the income slabs defined by the current tax regime) or those who satisfy other prescribed conditions for ITR forms 2-7 are required to file their annual income tax return (ITR) within the specified due date. Note that you can be notified for not filing your ITR.

What are the prerequisites for e-filing an Income Tax Return?

E-filing of income tax returns has made the process of filing ITR a breeze. Generally, the following documents are required:

● Copy of the PAN card,

● Copy of the AADHAR card,

● Bank Statement / Bank passbook

● Income Tax Login ID & password