How to Calculate Income Tax on Salary

Income tax is an amount which is calculated on the income which is earned by a person by any means. The income tax is calculated as per the income of the person. With respect to the salary and the mode of income the tax is deducted. In India various benefits have been provided to people under the income tax act. These benefits include benefit to the senior citizen and benefits to women.

How to calculate income tax on salary in India ? 

 

The first thing that you need to do is to find out the amount of income tax that will be deducted from you salary. For this you need to find out that portion of your income from which the tax will be deducted and based on that you can income tax calculator can be done. 

 

This will be  your entire salary along with the various  allowances paid now from this amount you need to subtract all the  exemptions (these exemptions must include all the  re-imbursements and the medical HRA  .). now from this amount you need to further subtract  any kind of interest which you have  paid with respect to your housing loans (the amount for loan for any self occupied will be max 1.5 lakh  and  for house let outs it can be any amount)

 

These  deductions come  under income tax  Chapter VI-A (80C, 80CCC etc.). When you fill in form 16 these information will be available over there. On base of this the tax will be calculated as per the income tax sections which is mentioned in the schedule one of the income tax act.

 

There are certain income tax exemption, income tax slab and these include the following

 

There is an income tax exemption  up to Rs.2 lakh for  a man who is under the age of  65 years and there is an exemption of Rs 2 lakh for a woman who is under the age of 55. There is also an exemption of  5 lakhs for people above the age of 60 i.e. for senior citizens. You must have pan card details while filing the income tax return since pan card is mandatory for employee and  business person.

For example, for a  male who is of age 25 years his income tax will be calculated in the following way,

 

Salary income  = 800000
Exemptions of income tax  under Section 10  = 70000
Salary less exemptions = 730000
Deductions under the income tax Chapter VI-A  =200000
Taxable Income  = 530000