How to calculate Income Tax on Salary

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Income Tax
Income Tax

The best part of the end of the month is the expectation of obtaining your salary but income tax can be a dampener on your joy. Most of us receive our salaries by the first half of the month. Our employers are bound by law to deduct income tax on salary for us as individuals before they disburse the monthly wage. But it is the individual who is responsible for payment of income tax and submission of income tax returns at the end of every financial year.

Calculate Income Tax on Salary

Income is usually calculated by adding basic salary, HRA, transport allowance, special allowance, perquisites, and all the other allowances together. Some of these allowances are exempted from income tax slab and to get all possible deductions, you need to calculate it well.

Income tax deduction by employers on the salary of employees is done mandatorily in India. The employer needs to subtract the applicable amount of income tax based on the estimated income of the employee and deposit the same with the government.

The tax schedule for financial year 2017-18 are shown below:

  • for salary earners below 60 years:
Annual IncomeTax Rate
Up to Rs.2,50,000Nil
Rs.2,50,001-Rs.5,00,0005%
Rs.5,00,001-Rs.10,00,00020%
Above Rs.10,00,00030%
  • for income earners between 60 years and 80 years:
Annual IncomeTax Rate
Up to Rs.3,00,000Nil
Rs.3,00,001-Rs.5,00,0005%
Rs.5,00,001-Rs.10,00,00020%
Above Rs.10,00,00030%
  • for income earners between 80 years and over
Annual IncomeTax Rate
Up to Rs.5,00,000Nil
Rs.5,00,001-Rs.10,00,00020%
Above Rs.10,00,00030%

You can always use our income taxes calculator to simplify your tax determination. With this automated tax calculation system, you need only enter the information asked in the stated fields and push the calculate button. The online Income Tax calculator will calculate the final amount after eliminating all necessary deductions.

You can find more tax-related information on other interesting topics here.

Deductions

The government grants tax exemption (under Section 80C and 80D) which allows a person to apply income deductions from taxable income based on certain investments she is allowed to make for the purposes of tax saving in that financial year. These tax saving instruments must then be subtracted from total annual earnings. What remains will be the amount on which existing tax rates will apply.

 Some typical components of salary on which income tax exemption falls are given below:

  • House Rent Allowance – If an employee lives in a rented accommodation and receives HRA from her employer, she can declare this amount as a tax deduction
  • Conveyance/ Travel Allowance – Such an allowance is tax-exempt as part of an expense.
  • Medical Allowance – To claim this tax deduction the employee must furnish medical bills when filing tax returns.

You don’t have to be a math genius to do your taxes! You can instead hire a tax expert. We, at AllIndiaITR, guarantee you the best rates in the market for totally personalized financial services such as income tax e-filing, TDS payments online, ITR return submission, NRI tax compliance, income tax refunds, calculation of taxable income, etc.

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8 COMMENTS

  1. for the first time i had seen such a simple and efficient blog which contains the tax rates based on our salary.at a glance this blog clears all our doubt in calculating income tax based on our salary. and the main thing is that it provide an age classification and income which in detail give more accurate tax rate results for all who were being looking such a thing …great work ..!!!

  2. This is really helpful for me.Thnx for this this really help me alot.This blog is really helpfull for us to know more about ITR. This tell us everything that we should know about ITR. This is like a algorithm to fill taxes becaute it tell us step by step how we should fill taxes and yes it is also easy to understand. It tell breifly and accurately about taxes. The best thing about this blog is that we can get every information hear only. we shoud not go on different side to search about itr. Great work keep it up.
    Can you tell me more about house rent allowance?

  3. Thank you for the sharing good knowledge and information. It’s very helpful and understanding. I have been looking for this information since long time. None of the tax or investment blogs or websites provide such detailed tax rates based on salary. After reading this, I was able to calculate income tax very easily. Great work ALL INDIA ITR

  4. THANKS FOR CLEAR THE TAX BASED ON OUR SALARY. FOR ME DIFFICULT TO UNDERSTAND TAX ON OUR SALARY BUT YOUR ALL BLOG ARE VERY SIMPLE. I’M SHARE YOUR BLOG WITH MY FRIENDS AND RELATIVES.

  5. I’m very grateful of you for providing such an amazing article regarding salary deduction in our salary and more importantly present that data in such a easy way collecting all the information age and salary wise, now we will able to calculate out income tax from you etax-calculator now on we can able to check our income tax by our own and make sure of it. Well appreciate ALL INDIA ITR

  6. This is the blog that i needed and i have been searching for such blog from a very long time now but today finally i found it and that to even in such an easy language which was really easy for me to understand and very easy to learn from it. It has made me understand the most important thing that is i always thought that tax is only paid on the income that we earn every month and i never knew that other things are also added while calculating the taxes. It also teaches people how to save tax through easy procedures. I only have one question though that is why the income tax percentage is same for all the age groups? Well done ALL INDIA ITR.

  7. Thanks for your feedback.

    We are glad to know that you found this page helpful. We advise you to sign up on our site to benefit from our best tax related services, such as HRA calculator, Rent Receipt generator, Income tax calculator, NRI tax plan, ITR filing, Expert Assistance, and more.

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