Selected Financial Year :
Income Tax Calculator: FY 2024-2025
Tired and confused about how much tax you have to pay? Fret no more!
Our income tax calculator tool is as easy to use as it gets. It will help you estimate your taxes for the new financial year. Whether you're more comfortable with the traditional deductions of the old tax regime or want to explore the simplified tax rates of the new tax regime, our tool is designed to guide you through both options.
Tax Calculator
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Understanding Your Taxable Income
Taxable income includes all the money you make that the government can tax.
This means not just the money you earn from jobs (like your salary), but also what you make from owning a house or apartment that you rent out (house property), money you gain from selling things for more than you bought them (capital gains), and cash from other sources.
Understanding with an Example
Let's suppose Mr. Kumar, earning ₹60,000 monthly, uses an income tax calculator to assess his FY 2024-25 tax liability. By inputting his income and deductions, he determines his tax obligations, ensuring financial planning and tax compliance.
Income Details and Deductions
Sr No | Nature of Income | Amount (₹) |
|---|---|---|
1 | Annual Salary | 7,20,000 (₹60,000 x 12) |
2 | Standard Deduction | 50,000 |
3 | Other Deductions (Investments, etc.) | 1,50,000 |
Calculation of Total Taxable Income:
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Gross Annual Salary: ₹7,20,000
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Less: Standard Deduction: ₹50,000
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Net Taxable Salary: ₹6,70,000
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Less: Other Deductions: ₹1,50,000
Total Taxable Income: ₹5,20,000
(Calculation: ₹7,20,000 - ₹50,000 - ₹1,50,000 = ₹5,20,000)
Income Tax Calculation Under Old Tax Regime
Tax Slabs and Applicable Tax Rates:
Sr No | Taxable Income Range | Tax Rate | Tax Calculation | Tax Amount (₹) |
|---|---|---|---|---|
1 | Up to ₹2,50,000 | Nil | No tax | 0 |
2 | ₹2,50,001 to ₹5,00,000 | 5% | 5% of (₹5,00,000 - ₹2,50,000) = ₹12,500 | ₹12,500 |
3 | Above ₹5,00,000 | 20% | 20% of (₹5,20,000 - ₹5,00,000) = ₹4,000 | ₹4,000 |
How to use the Income Tax Calculator for FY 2024-25?
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Choose the financial year for tax calculation.
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Select your age group for accurate tax liability.
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Click "Go to Next Step."
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Enter taxable salary after deductions (old tax slabs) or total salary without deductions (new tax slabs).
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Include other income like interest, rent, and digital assets.
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Proceed to the next step.
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For old tax slabs, input tax-saving investments (Section 80C, 80D, etc.).
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Click "Calculate" for tax liability and see pre-post budget comparison.
Components of Taxable Income
Salary: This is the income earned from employment.
Income from House Property: This is the rental income one earns from owned property.
Income from Business or Profession: Any profit or gain coming from business is taxable here.
Capital Gains: If one sells a capital asset, this is termed as capital gain.
Income from Other Sources: This includes income from interest on savings accounts, fixed deposits, dividends, winnings from lotteries, gifts received, etc.
Income from Investments: Includes interest on bonds, dividends from shares, rental income from real estate, etc.
Foreign Income: Income earned by Indian residents from sources outside India may also be taxable in India, subject to certain conditions and exemptions.
Old vs. New Tax Regime
Both regimes come with their own set of advantages and disadvantages. Here are the differences between the two:
Old Tax Regime:
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Under the old regime, taxpayers can claim various deductions and exemptions allowed under the Income Tax Act. These deductions include but are not limited to:
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Standard deduction on salary income.
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Deductions under Section 80C (Investments in Provident Fund, ELSS, PPF, etc.).
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Deductions under Section 80D (Medical insurance premium).
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Deductions under Section 24 (Interest on home loan).
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Deductions under Section 80TTA (Interest on savings account).
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Tax slabs under the old regime remain higher, with more tax rates for higher income brackets.
New Tax Regime:
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The new tax regime offers lower tax rates but fewer deductions and exemptions.
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Taxpayers cannot claim most deductions and exemptions available under the old regime.
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The new regime offers a flat tax rate structure with no deductions allowed, except for certain specified exemptions.
Key Differences:
The old tax regime offers more deductions and exemptions, which can significantly reduce the taxable income, resulting in lower tax liability.
The new tax regime offers lower tax rates but limits deductions and exemptions, which may be beneficial for taxpayers who don't have many deductions or prefer simplicity.
Here’s the updated tax slab structure reflecting the New Tax Regime changes from FY 2024-25, which includes the ₹7 lakh rebate limit:
Sr No | Annual Taxable Income | New Tax Regime (FY 2024-25 Onwards) | Old Tax Regime |
|---|---|---|---|
1 | Up to ₹2.5 lakh | Exempt | Exempt |
2 | Over ₹2.5 lakh to ₹3 lakh | Exempt | 5% |
3 | Over ₹3 lakh to ₹5 lakh | 5% | 5% |
4 | Over ₹5 lakh to ₹6 lakh | 5% | 20% |
5 | Over ₹6 lakh to ₹7 lakh | 5% | 20% |
6 | Over ₹7 lakh to ₹9 lakh | 10% | 20% |
7 | Over ₹9 lakh to ₹10 lakh | 10% | 20% |
8 | Over ₹10 lakh to ₹12 lakh | 15% | 30% |
9 | Over ₹12 lakh to ₹15 lakh | 20% | 30% |
10 | Above ₹15 lakh | 25% | 30% |
Notes:
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In the New Tax Regime, individuals with income up to ₹7 lakh receive a rebate under Section 87A, making their tax liability effectively zero.
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The New Tax Regime has a simplified slab structure and lower rates for certain income brackets compared to the Old Tax Regime, aimed at providing relief to middle-income taxpayers.
Step by Step Guide to Access Taxbuddy's Income Tax Calculator
Step 1: Access the Calculator:
Navigate to https://www.taxbuddy.com/ > Resources > Calculators > Select Income Tax Calculator.
Step 2: Provide details such as: Financial year, age, and whether you're salaried or not.
Step 3: Enter your financial details and click on "'CALCULATE."
Step 4: The calculator will compute your income tax based on the details you specify.
Maximizing Your Tax Savings
To make the most out of your tax savings, focusing on wise investments and deductions can be a game-changer.
With the right tax-saving tips, you can significantly reduce the amount of tax you have to pay.
By carefully choosing your investments and making the most of various deductions allowed by the tax laws, you can keep more money in your pocket.
Investment Options for Tax Saving
When it comes to reducing your taxable income, not all investments are created equal. Some can be powerful allies in your quest for tax savings. Let's explore a few options:
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Public Provident Fund (PPF): The PPF is like a savings account on steroids when it comes to tax savings.
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Equity-Linked Savings Scheme (ELSS): It is a mutual fund that comes with a tax-saving cape.
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National Pension System (NPS): NPS is like a savings plan for your older self. You contribute to it throughout your working life, and it helps you save on taxes today.
These are just a few of the options available for tax-saving investments.
Frequently asked questions
Q
How do I choose between the old and new tax regimes?
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Choosing between the old and new tax regimes depends on various factors such as your income, eligible deductions, and financial goals. The key differences are:
Title | Criteria | Old Tax Regime | New Tax Regime |
|---|---|---|---|
1 | Tax Rates | Higher | Lower |
2 | Deductions and Exemptions | Multiple available (e.g., Section 80C, 80D, HRA) | Limited; Standard deduction only |
3 | Best For | Individuals with significant deductions and exemptions | Individuals with fewer deductions |
Decision Making:
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Evaluate Your Deductions: Calculate potential savings from deductions under the old regime (e.g., investments under Section 80C, health insurance premiums under Section 80D).
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Use an Income Tax Calculator: Compare the tax liability under both regimes using an income tax calculator to determine which option results in a lower tax burden.
Q
What are the major deductions and exemptions available under the Income Tax Act, and how do they differ between regimes?
A
Sr No | Section | Old Tax Regime Deductions | New Tax Regime Deductions |
|---|---|---|---|
1 | 80C | Investments in PPF, NSC, ELSS, etc. | Not applicable |
2 | 80D | Health insurance premiums | Not applicable |
3 | 24(b) | Interest on home loan | Not applicable |
4 | HRA | House Rent Allowance | Not applicable |
5 | Standard Deduction | ₹50,000 for salaried individuals | ₹75,000 |
Under the old tax regime, taxpayers can claim various deductions for investments, insurance premiums, home loan interest, and more. However, the new tax regime simplifies the tax calculation process by offering lower tax rates and a standard deduction, but it restricts other deductions and exemptions.
Q
How does the income tax calculator determine my tax liability, and can it be used by both salaried and self-employed individuals?
A
An income tax calculator estimates your tax liability by:
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Inputting Income Details: Entering total income from various sources, including salary, business income, and other earnings.
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Deducting Eligible Amounts: Subtracting eligible deductions and exemptions as per the chosen tax regime.
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Applying Tax Rates: Applying the relevant tax slab rates to the taxable income to calculate the total tax payable.
The calculator can be used by both salaried and self-employed individuals. It helps in estimating taxes based on the selected tax regime, considering income sources, deductions, and exemptions.
Q
What should I do if I've paid more tax than I owe, and how are refunds processed?
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If you've paid excess tax, you can claim a refund when filing your income tax return. Here's how it works:
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Filing for Refund: While filing your tax return, ensure all income and deductions are accurately reported. The excess tax paid will be automatically calculated as a refund.
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Processing: The Income Tax Department verifies the return, and if the refund claim is valid, it processes the refund. You can track the refund status online using your PAN and assessment year details.
Q
How often are tax slab rates updated, and what impact does it have on taxpayers?
A
Tax slab rates are typically reviewed and updated annually during the Union Budget presentation by the government. Changes in slab rates can impact taxpayers by altering the amount of tax payable. It's essential to stay informed about any updates to plan your finances accordingly.
Q
Can taxpayers switch between the old and new tax regimes every year, and are there restrictions?
A
Yes, individual taxpayers can choose between the old and new tax regimes each financial year before filing their tax returns. However, once a regime is chosen for a particular year, it cannot be changed after filing the return.
Restrictions and Considerations:
The new tax regime may not allow certain deductions and exemptions, which could result in higher taxes for those with substantial investments in tax-saving instruments.
For business income earners, switching regimes more than once is generally not allowed unless specific conditions are met.
Q
What are the tax benefits available for senior citizens, and how do they differ from regular taxpayers?
A
Sr No | Age Group | Exemption Limit | Additional Benefits |
|---|---|---|---|
1 | Senior Citizens (60-80 years) | Higher exemption limits | Exemption from advance tax if there is no business income |
2 | Super Senior Citizens (80+ years) | Further increased exemption limits | Enhanced deduction for health insurance premiums under Section 80D |
Senior citizens are entitled to higher exemption limits, and super senior citizens have additional benefits, including higher deductions and exemptions, making tax planning more favorable for them.
Q
How do deductions for home loan interest work under the different regimes, and what should taxpayers consider?
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Under Section 24(b) of the Income Tax Act, taxpayers can claim a deduction on home loan interest up to INR 2 lakhs per annum in the old tax regime. This benefit is not available in the new tax regime.
Considerations:
Opt for the old regime if home loan interest deductions significantly reduce your tax liability.
Use an income tax calculator to see the impact of including or excluding this deduction.
Q
How can I reduce my taxable income legally, and what strategies should I employ?
A
Sr No | Strategy | Description |
|---|---|---|
1 | Tax-saving investments | Invest in PPF, NSC, ELSS, and other instruments |
2 | Claiming deductions | Use deductions under Sections 80C, 80D, etc. |
3 | Utilizing exemptions | Exemptions for HRA, LTA, etc. |
4 | Strategic planning | Plan for tax-saving investments early in the year |
Reducing taxable income legally involves making informed decisions about investments, utilizing all available deductions and exemptions, and planning financial moves strategically to minimize tax liability.
Q
What are the key differences between the old and new tax regimes, and how do they affect taxpayers?
A
Sr No | Aspect | Old Tax Regime | New Tax Regime |
|---|---|---|---|
1 | Tax Rates | Higher | Lower |
2 | Deductions | Multiple available (80C, 80D, HRA, etc.) | Limited; mainly standard deduction |
3 | Exemptions | More comprehensive | Limited |
4 | Best For | Individuals with high eligible deductions and exemptions | Individuals preferring a simpler tax calculation with lower rates and fewer deductions |
Impact on Taxpayers:
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Old Regime: Beneficial for those with significant eligible deductions.
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New Regime: Simpler with lower rates but fewer tax-saving options.
Q
What should taxpayers consider when selecting a tax regime, and can they change their choice after filing?
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Evaluate your annual income and expenditures, focusing on tax-saving potential under each regime. While individual taxpayers can choose the regime annually, they cannot change their choice after filing the return for that year.
Thoroughly assess both regimes using an income tax calculator and consider long-term financial goals before making a decision.