How to Calculate Your Income Tax in India
Identify the tax slab applicable to you., Identify the deductions that are available for tax-saving., Determine and apply the rules of income, deductions, and exemptions involved with investing tools including: Equity Linked Savings Schemes (ELSS)...
Step-by-Step Guide
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Step 1: Identify the tax slab applicable to you.
In order to determine the tax liability, first calculate your earnings.
Whether you are a senior citizen or not will have an impact on the calculations, so bear this in mind. -
Step 2: Identify the deductions that are available for tax-saving.
In order to provide an impetus for higher savings, the investment limit under Section 80C of Income Tax Act, 1961 was raised from Rs 1 lakh to
1.5 lakh to available tax exemption as per the 2014-15 budget. , The main conditions are that the mortgage is secured by the home you live for most of the time, and that you used this mortgage to either purchase or build your home.
When selling the home, any unused points that were amortized (financed)
-- verify whether that can be written off in the year of sale.
Deductions u/s 10(13A) – House Rent Allowance (HRA) Being an employee of an organization, you are eligible to claim HRA which is the minimum of the following:
Actual HRA received Or Actual rent paid by you minus 10% of your basic salary and other allowances (excluding HRA) Or 50% of your basic salary If actual HRA received exceeds the last two, and if you fall under either of them, then the excess amount becomes a part of your taxable income.
Deductions u/s 24 – Home Loan:
You may claim deduction under this category for the interest component arising out of the loan amount taken for your house.
The maximum limit for deduction is as follows:
Self-occupied property – Rs 2,00,000 (200 thousand rupees) Non self-occupied property – No upper limit , Mentioned above is the tax calculation for a non senior citizen. , You will be able to calculate your own income tax through assessing all of the above and doing the sums accurately. -
Step 3: Determine and apply the rules of income
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Step 4: deductions
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Step 5: and exemptions involved with investing tools including: Equity Linked Savings Schemes (ELSS) ULIPs (Unit Linked Insurance Plans) Life Insurance policies Tuition and fees of children’s education Employees Provident Fund/Public Provident Fund National Savings Certificates or Interest accrued on old NSCs Early repayment of home loan by paying additional on the principal amount only Pension Funds Some tax exemption that you may have are as follows: Mediclaim insurance premium (u/s 80D) New Pension Scheme
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Step 6: maximum of 10% of the basic salary (u/s 80CCD) Donations with 100% benefit (u/s 80G) Interest repayment for education loans (u/s 80E) Rajiv Gandhi Equity Savings Scheme
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Step 7: RGESS (u/s 80CCG) Deductions u/s 80CCC
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Step 8: Deduction For Mortgage Origination Fees When buying a home
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Step 9: check whether points are deductible in the year they are paid
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Step 10: providing they meet certain conditions.
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Step 11: Calculate the taxable income and income tax.
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Step 12: Check all of your calculations.
Detailed Guide
In order to determine the tax liability, first calculate your earnings.
Whether you are a senior citizen or not will have an impact on the calculations, so bear this in mind.
In order to provide an impetus for higher savings, the investment limit under Section 80C of Income Tax Act, 1961 was raised from Rs 1 lakh to
1.5 lakh to available tax exemption as per the 2014-15 budget. , The main conditions are that the mortgage is secured by the home you live for most of the time, and that you used this mortgage to either purchase or build your home.
When selling the home, any unused points that were amortized (financed)
-- verify whether that can be written off in the year of sale.
Deductions u/s 10(13A) – House Rent Allowance (HRA) Being an employee of an organization, you are eligible to claim HRA which is the minimum of the following:
Actual HRA received Or Actual rent paid by you minus 10% of your basic salary and other allowances (excluding HRA) Or 50% of your basic salary If actual HRA received exceeds the last two, and if you fall under either of them, then the excess amount becomes a part of your taxable income.
Deductions u/s 24 – Home Loan:
You may claim deduction under this category for the interest component arising out of the loan amount taken for your house.
The maximum limit for deduction is as follows:
Self-occupied property – Rs 2,00,000 (200 thousand rupees) Non self-occupied property – No upper limit , Mentioned above is the tax calculation for a non senior citizen. , You will be able to calculate your own income tax through assessing all of the above and doing the sums accurately.
About the Author
Kelly Sanders
Experienced content creator specializing in practical skills guides and tutorials.
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