When trying to calculate your income tax, you should first understand the basics such as various tax-brackets, permitted exemption, how to get refund, etc.
Calculating Income Tax for E-filing
The investments you make actually make a significant difference when arriving at the final amount. Thus, one should also know about the most common types of tax deductions.
Check our income tax calculator which automatically computes the final amount after reducing the applicable deductions when you submit the necessary data in the form shown to you.
Let’s take an example to better understand the calculation part. It is a common myth that different rates are used directly for the total tax-amount. This is not the case though.
Assuming you are less than 60 years old and earning Rs 12 lakh annually, then you won’t be charged 30%, i.e. Rs 360000, directly on your total salary.
You can find more income tax and efiling related information on our blog page.
Income Tax for E-filing
Your tax will be calculated as below:
First, if you are eligible for any deductions, your taxable income will be evaluated.
Let’s say, your taxable amount comes out to be Rs 12,00,000.
Now, total value will arrive by summing the amounts in parts.
For the amount between Rs 250000 and Rs 500000, i.e. Rs 250000, you will be charged at 5%. This comes out to be Rs 12500.
For the amount between Rs 500000 and Rs 1000000, i.e. Rs 500000, you will be charged at 20%. This comes out to be Rs 100000.
For the amount between Rs 1000000 and Rs 1200000, i.e. Rs 200000, you will be charged at 30%. And, this comes out to be Rs 60000.
So, the total tax to pay = Rs 12500 + 100000 + 60000
= Rs 1,72,500
In the same way, you can compute for other slabs as well.