The official Income and Tax Calculator feature available on the tax portal allows registered and unregistered e-filing members to compute their tax liability under the purview of the Income Tax Act and tax norms. By simply entering a few crucial income details and applicable deductions, individuals can compute tax under both old and new tax regimes and compare their taxes under the old and new regimes.
Hence, such a tool can help taxpayers simplify their tax liability calculation and plan the same effectively. Individuals may also consider using online tax calculators on third-party sites to compute tax liabilities and plan their refund claims accordingly. However, to make the most of such tools it is important to understand the calculators’ features and limitations. That said, let’s explore how to use an online tax calculator on the official tax portal, prerequisites to access the tool, and other important information.
A Brief Introduction to Income Tax Calculator
An online income tax calculator uses factors such as the user’s income, age, income sources, exemptions, deductions, tax credits, and taxable slab to determine one’s liability. Such a tool is typically free to use and can be accessed online. This encourages individuals to compute their tax liabilities accurately and simplify the multiple-step process significantly. The tool relies on the variables to ascertain the tax burden and does not necessarily need any manual calculation to arrive at the results. This makes the process quick and simple for formula users. Online income tax calculator also allows multiple adjustments to account for mistakes promptly. Notably, there are certain prerequisites to use the income and tax calculator service if accessed from the e-filing website.
What are the Prerequisites to Access The Online Income and Tax Calculator?
To access the e-filing portal and meet the requisites follow these steps –
Step 1: Visit the e-filing portal webpage.
Step 2: Navigate to Quick Links > Income and Tax Calculator
Step 3: Once directed to the Income and Tax Calculator page users will see two tabs – advanced calculator and basic calculator. Typically, the basic calculator is the default tool. However, users have the option to change it based on their needs.
- To use the Basic Calculator: Enter key details such as assessment year, age, taxpayer category, total annual income, deduction, and residential status. The tax details will appear in the tax summary section after all information is entered by the user.
Users can click on the ‘View Comparison’ tool to avail a detailed comparison of tax liability under old and new tax regimes.
- To use the Advanced Calculator: Enter key details such as chosen tax regime, assessment year, age, residential status, taxpayer category, due date, and exact date of return submission.
Notably, under ‘Details for Income and Tax’ calculations, users need to enter income details under headers of –
- Salaries
- House Property
- Capital Gains
- Business or Profession
- Other Sources
On the other hand, under ‘Deduction Details’, users need to enter relevant deductions that are applicable to them not necessarily limited to life insurance quotes of premiums, home loans, PPF, mediclaim, NPS, or loans on higher education. Under the category of ‘Taxable Income’ users would need to enter or edit their applicable TDS/TCS details and offer substantial evidence. Notably, after entering these details the total tax and interest paid are displayed at the end of the page.
What are the Exemptions Under Old and New Tax Regime?
Individuals who have parked their money into savings schemes or incurred expenses are typically eligible for tax deductions. To claim them and not miss out on them individuals are encouraged to deduct applicable investments from their gross taxable income and subsequently lower their tax burden and then proceed to pay taxes.
For the Old Tax Regime
The following come under the purview of the old tax regime –
- The standard deduction is Rs. 50000 for salaried individuals.
- LTA travel purposes are exempted.
- Interest on a self-occupied housing loan is considered to be eligible for a deduction of up to Rs. 2 lakh in a year.
- Education loans under Section 80E.
- Deductions on charity and donations made in a year under Section 80G.
- Deduction of up to Rs. 10,000 on the interest amount earned from one’s savings account.
- Individuals and HUFs can claim up to Rs. 1.5 lakh under Section 80C of the Income Tax Act.
- Medical expenses under Section 80D can also be deducted.
For the New Tax Regime
These deductions are available to taxpayers under the next tax regime –
- Interest on housing loans for a rented-out property under Section 24(b).
- Employer contribution into National Pension Scheme under Section 80CCD (1B).
- Interest and maturity proceeds of Sukanya Samriddhi Yojana and PPF are exempted. Notably, new tax laws eliminate tax deductions for investments made towards these avenues.
- Transport allowances for disabled individuals.
- Conveyance allowance availed to meet work-related expenses
- Remunerations paid to cover transfer or tour costs
- Indemnity paid to meet daily normal costs or expenses incurred in the absence of a regular duty site.
- Salaried individuals can claim a standard deduction of Rs. 50000 under this new regime. Notably, previously this tax deduction was made available to taxpayers only under the old regime.
- Expenses for additional employees under section 80JJA
- The contribution made towards Agniveer C
- Corpus fund under Section 80CCH for tax deductions
It should be noted that section 57(iia) was made available under the new tax regime to allow individuals to claim tax deductions related to the income generated from family pensions. Taxpayers can now claim a deduction of the one-third sum or around Rs.15000, whichever is less.
While an online income tax calculator can help ascertain the estimated tax liability for a year, the onus of figuring out and providing information about the applicable deductions, exemptions, and income sources, lies on the user. Since these details are crucial for calculation, filing, and also claiming refunds, taxpayers should consider consulting with financial advisors or tax consultants to gain a better idea about their tax savings scope and liabilities.
