We always calculate our salary, don’t we? But, do you know to calculate your taxable income is quite important too. We see our take-home salary and then calculate, how much tax is being deducted. Tax deduction is not a subject that will make you happy, especially when you fall in the last slab of 30%. You have to determine how much income tax is being deducted so that you can claim it back by providing investment proofs.
Calculate your Taxable Income
Here are the tax slabs that salaried individuals must know about: –
|Income Slab||Tax Rate|
|Upto Rs. 2.5 lakh||No tax|
|Rs. 2.5 lakh to Rs. 5 lakhs||5%|
|Rs. 5 lakhs to Rs. 10 lakhs||20%|
|Rs. 10 lakhs and above||30%|
To calculate your taxable income, you will have to understand the components your salary is made with. Basically, your salary is the sum of your Basic Salary, HRA, Special Allowance, Transport Allowance, and any other allowance. If you live in a rented apartment, you can claim HRA and get exemption. To further save taxes, make a note of your investments in insurance, mutual funds (ELSS), pension schemes, national savings certificates, etc.
Some components in your salary are non-taxable such as your telephone and medical bills.
In case, your salary is Rs 5 lakh, you can avail a medical reimbursement of Rs 15,000 and transport allowance of Rs 19,200, as per your company’s policy.
That’s why, your net income after the standard deductions will be Rs 4,65,800. Also, you can deduct any other exempted portion such as HRA, or any other.
If you have received any bonus during the financial year, that must be added for the income that is being calculated. The result is your net income from salary.
Imcome tax calculate
Once your net income has been calculated, the tax slab under which you fall will be applicable.