Every year you have to pay a handsome amount from your yearly income. But you may be curious to know how much you have to pay in taxes, which can be easily calculated using the income tax calculator. Let's see how the income tax calculator is a very helpful tool to calculate the yearly tax liability based on the tax slabs announced in the Union Budget on February 1 every year.
In this section, you will learn and get to know about:
How to calculate income tax liability using the income tax calculator?
Income Tax Rates Under the New Tax Regime for AY 2023-24
Income Tax Rates Under the Old Tax Regime for AY 2023-24
Example of Income Tax Calculation
Other Taxpayers Slabs for AY 2023-24
The income tax calculator AY 2023-24 (assessment year) or financial year 2022-23 is available for free of cost on the income tax India website or on any other related website, which helps you to calculate yearly income tax liability at free of cost which has incorporated different types of taxpayers, acts, and rules applicable in it.
The steps of using the income tax calculator are:
Step 1: In the income details tab, add:
Gross Annual Income/ Salary
Other Income (Annually)
Basic Salary (Basic + DA)
City of Residence
After entering in these details, click on continue:
Step 2: In the 'Investment Details' section, add in the amounts for:
80C Deductions (Term Insurance policies, PPF, ELSS Funds, Pension funds)
80 CCD (1B) (National Pension Scheme)
80 CCD 2 (Employer's Contribution to NPS)
80 D (Health Insurance Policies for self, spouse and children)
80 E (Interest on Education Loan)
80 EE ( Interest on Housing loan)
80G, 80 GGA, 80 GGC Donation
Click on continue. Now, you will get the output for Income tax applicable in old Tax Regime and New Tax Regime. In each of these tabs, the calculator gives the output as:
The portal also provides a pie-chart detailing the portions for taxable income, total investments, HRA Exemptions and Deductions.
**The tax calculated here is a tentative figure.
To calculate income tax online, it is important to know that tax exemptions and deductions are not allowed in the new tax regime. Therefore, the tax rates are lower as compared to the old tax regime. Also, the tax rates are the same for individuals below 60 and above 60 years of age.
|Net Taxable Income Per Year||Income Tax Rates For Individuals and HUFs|
|Up to ₹ 2.5 lakhs||Nil|
|₹ 2.5 lakhs to ₹ 5 lakhs||5% above ₹ 2.5 lakhs|
|₹ 5 lakhs to ₹ 7.5 lakhs||₹ 12,500 + 10% above ₹ 5 lakhs|
|₹ 7.5 lakhs to ₹ 10 lakhs||₹ 37,500 + 15% above ₹ 7.5 lakhs|
|₹ 10 lakhs to ₹ 12.5 lakhs||₹ 75,000 + 20% above ₹ 10 lakhs|
|₹ 12.5 lakhs to ₹ 15 lakhs||₹ 1,25,000 + 25% above ₹ 12.5 lakhs|
|Above ₹ 15 lakhs||₹ 1,87,500 + 30% above ₹ 15 lakhs|
The following are the important deductions allowed under the new tax regime:
The interest paid on the home loan for a rented-out property is deductible under Section 24(b).
The employer's contribution to the National Pension Scheme (NPS) is available under Section 80CCD (1B).
The maturity amount received and the interest receipt are also tax-free for the PPF and Sukanya Samriddhi Yojana.
A 4% health and education cess is applied in both regimes.
A surcharge is an additional rate applied to an individual whose income exceeds a certain threshold, and the net income calculator also provides the taxpayer with an automated way to calculate it. The taxpayer who pays the surcharge amount and the normal tax amount will receive marginal relief up to the amount of the difference between the excess tax payable (including the surcharge) on income above ₹ 50 lakhs and the amount of income that exceeds ₹ 50 lakhs. Similarly, the marginal relief is applicable to other income ranges as well.
|Income Range||Surcharge Rates|
|₹ 50 lakhs -- ₹ 1 crores||10%|
|1 crores - ₹ 2 crores||15%|
|₹ 2 crores - ₹ 5 crores||25%|
|More than ₹ 5 crores||37%|
Section 115 BAC of the Income Tax Act provides salaried individuals in India the option of choosing between the old and new tax regimes. The salary tax calculator also calculates the old tax regimes that allow for deductions and exemptions and provide different rates for individuals below 60 years of age, senior citizens, and super senior citizens.
|Net Taxable Income Per Year||Tax Rates for Individuals below 60 years and HUFs|
|Up to ₹ 2.5 lakhs||Nil|
|₹ 2.5 lakhs to ₹ 5 lakhs||5% above ₹ 2.5 lakhs|
|₹ 5 lakhs to ₹ 10 lakhs||₹ 12,500 + 20% above ₹ 5 lakhs|
|Above ₹ 10 lakhs||₹ 1,12,500 + 30% above ₹ 10 lakhs|
|Net Taxable Income Per Year||Tax Rates for Senior Citizens Aged between 60 but less than 80|
|Up to ₹ 3 lakhs||Nil|
|₹ 3 lakhs to ₹ 5 lakhs||5% above ₹ 3 lakhs|
|₹ 5 lakhs to ₹ 10 lakhs||₹ 10,000 + 20% above ₹ 5 lakhs|
|Above ₹ 10 lakhs||₹ 1,10,000 + 30% above ₹ 10 lakhs|
|Net Taxable Income Per Year||Tax Rates for Super Senior Citizens Aged equal to or more than 80|
|Up to ₹ 5 lakhs||Nil|
|₹ 5 lakhs to ₹ 10 lakhs||20% above ₹ 5 lakhs|
|Above ₹ 10 lakhs||₹ 1,00,000 + 30% above ₹ 10 lakhs|
The deductions can be claimed under Section 80C to 80U of the Income Tax Act, 1961 and some of the important deductions are:
The standard deduction is up to ₹50,000 for salaried individuals and also leave travel allowance (LTA) exemption.
The maximum amount that can be claimed under Section 80C of the Income Tax Act, 1961 for individuals and HUFs is ₹1.5 lakhs.
The income tax calculator 2023 will be used to calculate the total tax liability in both the old and new tax regimes. Mr. X works in Delhi and has a basic monthly salary of ₹ 1.2 lakhs, an HRA of ₹ 60,000 per month, other allowances of ₹ 30,000 per month, and a leave travel allowance (LTA) of ₹ 40,000 per year.
His yearly income from long term capital gains is ₹ 50,000 and interest is ₹ 75,000. He has invested in Section 80C tax-saving options, an additional ₹ 50,000 in NPS, and a ₹ 25,000 medical insurance premium. He also claimed a ₹ 5,000 tax deduction under Section 80TTA for the interest on her savings account.
|Subheadings||Old Regime (in ₹)||New Regime (in ₹)|
|Yearly basic salary||14,40,000||14,40,000|
|Yearly special allowance||3,60,000||3,60,000|
|Gross Income from Salary||25,10,000||25,60,000|
|Life Insurance premium paid||(25,000)||-|
|Contribution toward provident fund / PPF||(50,000)||-|
|Contribution toward NPF||(25,000)||-|
|Mr. X's contribution toward NPS under the Section 80CCD||(50,000)||-|
|Additional contribution towards NPS under the Section 80CCD(1B)||(50,000)||-|
|Employer's contribution toward NPS under the Section 80CCD||(50,000)||(50,000)|
|Medi-claim premium under the Section 80D||(25,000)||-|
|Interest earned on deposits in saving account under the Section 80TTA||(5,000)||-|
|Net Taxable Income||23,55,000||26,35,000|
|Income Liable to Tax at Normal Rate||23,05,000||25,85,000|
|Tax at Normal Rate||5,04,000||5,13,000|
|LTCG charge @ 10%||5,000||5,000|
|Income Tax Amount||5,09,000||5,18,000|
|Health and Education Cess||20,360||20,720|
|Total Tax Liability||5,29,360||5,38,720|
So, as per the net pay calculator, the total tax liability that Mr. X has to incur is lower in the old tax regime as compared to the new tax regime. Therefore, the net salary calculator is very helpful for salaried individuals to calculate their annual tax liability under both regimes and decide which regime is best for them.
However, there is no sure shot rule to decide which one is better, but there are some insights on choosing the best one. The new tax regime benefits those with taxable incomes less than 15 lakhs, while the old tax regime benefits those with taxable incomes greater than 15 lakhs. The old tax regime is more helpful for an individual who has a tax-saving investment plan ready and actively chooses to invest in it than for an individual who doesn't have a strong investment plan.
A taxpayer may also change their tax regime every year based on their preferences and benefits. However, the non-salaried individual cannot make that switch frequently, and once they choose the new tax regime, they have to continuously do so.
The taxable income calculator provides approximate taxable income and annual tax liability. It is a quick and convenient tool to use that provides access to history and also helps you manage your expenses and investments in advance. Also, the calculation of income tax has become very easy without the need for prior knowledge, and the taxpayers are advised to use the income tax calculator for a comparative analysis of both regimes and then choose the one that is most beneficial for them.
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