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The government levies Income Tax on the income earned by an assessee during the previous year. The tax is payable in the assessment year at the rate prescribed by the significant Finance Act. Income Tax is a source of revenue for the government. According to an analysis, 71% of the government’s total revenues are collected through taxes. The government uses these funds for infrastructural development and public welfare.

The Union Budget has left individuals confused with the choice of the tax regime. Both old and new tax regimes require a proper assessment before choosing one. With the help of the new income tax calculator FY 2023-24, you can gauge the impact of both the tax structures on your income. This calculator will help you estimate your taxes on your income.

An Income-tax calculator is an online tool that helps to evaluate taxes based on a person’s income once the Union Budget for the year is announced. Individuals falling under the taxable income bracket are liable to pay a specific portion of their net annual income as tax. Income tax can be paid either as tax deducted at source while disbursement of monthly salary, or through the income tax returns portal managed by the Central Board of Direct Taxes (CBDT). The provision for online payment of taxes is to ensure individuals pay their stipulated dues on any earnings generated from other sources.

Income Tax Calculator: An Overview

An income duty calculator is an online AI- grounded tool that assists an assessee to cipher the taxable income in agreement with the Income Tax Act, 1961. The calculator computes an estimated duty liability on your income by taking the five heads of income( income from payment, income from house property, income from gains and earnings of business, income from capital earnings, and income from other sources), deductions and immunity into consideration.

How is Income Tax Calculated?

Income Duty is calculated after calculating the total gross income under section 14 of the Income Tax Act, 1961. It’s the total of income reckoned under the five heads of income after allowing the set- off of losses according to the vittles of the duty laws. The five heads of income include

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Income from Salary

As a result of an express or unexpressed agreement, payment is compensation entered periodically by or accruing to an existent for services rendered. In simple words, payment is paid by the employer to an hand in consideration of the service rendered by them to the organisation. It includes the financial ornon-monetary value of benefits and installations handed by the hand. Any quantum entered other than from the employer can not be nominated as payment. Taxable income from payment is the difference between the gross payment and the deductions u/ s 16.

Income from Capital Gains

The gain on the transfer of a capital asset in the previous year is referred to as capital gains. Capital gains are broadly classified into short-term and long-term gains. Short-term and long-term gains are taxed at 10% and 15%, respectively. According to the act, capital gains are not taxable if an individual inherits the property and has no sale clause. Conversely, if the individual decides to sell the inherited property, it will be taxable under Income from Capital Gains.

Income from House Property

According to section 22, any structure or land appurtenant to a structure possessed by the assessee is subject to income duty under the head, Income from House Property. House parcels are classified into tone- enthralled house parcels, let out house parcels and inherited house parcels. The taxable income from house property is calculated after abating standard deductions and interest from a net periodic value on home loans.

Income from Business and Profession

Business and professional income refers to any income derived from business operations. The income earned by freelancers falls into this category. Simply put, it is the net profit or loss of a business.

Income from Other Sources

Any source of income that doesn’t fall under any of the other heads of income is chargeable to tax under the head income from other sources. For example:

  • Fee, commission, and remuneration received by an employee other than their employer.
  • Salary or pension received by an MLA, MP and MLC
  • Income from guest lectures
  • Remuneration received from universities for examination work by a non-employee
  • Director’s fee
  • Interest from foreign securities
  • Income from undisclosed sources
  • Composite rent received for letting building along with plant and machinery and furniture.
  • Rent from letting a vacant plot
  • Dividends from mutual funds, companies

Benefits of Filing Income Tax Online

Every assessee whose taxable income exceeds the exemption limit must file income tax returns in accordance to the specified slab rates. Individuals whose taxable income falls below the exemption limit are absolved from paying income tax. An assessee can file taxes manually or by e-filing intermediaries. By opting for e-filing, you can avail the following benefits:-

1

Convenience

As India embraces the digital world, filing taxes has become hassle-free. By opting for e-filing of income taxes, you can file your income tax return in the comfort of your home.
2

Storage of Records

Before e-filing, the documentation process was complex. In an e-filing process, most of the data is auto-filled with hyperlinks, making it much easier for tax filers to file prospective returns.
3

Minimising Errors

As humans, we are prone to make errors. Tax computation is a complicated process involving computations and manual calculations that might lead to errors. With the electronic-based filing, the possibility of errors is erased.
4

Confidentiality

Data breach has become a common practice in the digital world. E-filing scraps the possibility of a data breach. The data entered by an individual taxpayer is protected with high-security validations and passwords.
5

Cost-Efficient

Previously individuals had to hire professionals to file their returns and pay them a significant amount. With an e-filing system, an assessee can easily file their taxes through the income tax portal.
6

E-Payments

E-filing made the process of filing ITR returns hassle-free. Now, an assessee can link their bank account with the ITR profile and ensure direct deposit for a refund and direct debit for tax payments.
7

Timely Returns

In the traditional e-filing system, the taxpayers had zero clue about the status of their refunds. With an e-filing system, you can track your returns. Compared to the manual system, returns are processed faster in the e-filing system.
8

E-Verification

Before e-filing, income tax returns were sent to the Central Public Sector Commission in Bengaluru for verification. With the advent of the e-filing facility, Income Tax Returns can now be verified online via an electronic verification facility. The assessee must have an aadhaar card and a verified mobile number for OTP verification to opt for this facility.