Income tax calculator helps you gauge the impact of an old and new regime of tax liability on your income. It serves you with a proper assessment on which regime to select and get most of the benefit. 

Want to know more about its utility?

Keep reading!

An income tax calculator is an online tool of precision that lets you calculate tax liability based on your data. It is free, easy to use and provides an error-free result. However, any incorrect data can impact your calculation. Therefore, you should know the details discussed here before using it.

Note that irrespective of the chosen regime, the basic income tax calculation formula remains the same.

Here is the formula used by an online income tax calculator -

Total income tax = {Total income - (exempted limit + all applicable deductions + TDS)} x applicable tax rate as per income slab + cess

You can easily identify the amount you need to pay as income tax based on your salary by using the calculator. Just follow the simple steps given below.

Step 1: Under the Basic Details section first select your gender from the given options: (Male/Female/Transgender).

Step 2: Next step is to select your age group from the three given age range classifications.

Step 3: Now you need to insert your gross annual income under the allotted section.

Step 4: Insert your basic annual pay.

Step 5: Your next step is to select your city from the drop down menu. If your city is not among the given options then select the “other” option.

Step 6: The last step under the Basic Details options is to write your annual house rent allowance. Then click on the “Continue” button to proceed further.

Step 7: Now under the Investment Details section first enter your total invested amounts in the allotted tabs as per Income Tax Act 1961.

Step 8: Then you need to enter your professional tax amount.

Step 9: The next step is to input your medical insurance premium amount, if any.

Step 10: Then you need to enter the interests paid towards home loan and education loan, if any.

Step 11: Now you need to provide your income from interests that are eligible for deduction under the Income Tax Act 1961.

Step 12: Finally under the investment details section you need to insert your employer’s contribution towards the National Pension Scheme (NPS) and your monthly home rent expense.

Step 13: Lastly, check all the details thoroughly and hit on calculate after entering your personal details.

Step 14: Check your income tax payable as per the old and new regimes.

Note: You should input all monetary values in rupees.

The benefits of an income tax calculator are as follows -

• Planning your tax liability 
• Precise, easy and comprehensive
• Saving time
• Getting right information
• Free tool
• No login or credentials are required
• Shows details about the calculation
• Can select any option among new and old regime

Implementing the new and old regimes in the Union Budget of 2020 created a lot of confusion among taxpayers. Therefore, individuals must calculate their tax liability based on the regime they can benefit most from.

An income tax calculator is very helpful in resolving this issue by demonstrating a specific taxable amount to you based on the data provided.