Last Updated on February 21, 2024 by Nasir Hanif
Are you wondering how to calculate income tax? If yes, then in this article you will be able to learn an easy process. Scheduling a session with your chartered accountant when it comes to calculating income taxes has become obsolete. These days you can instead use an online income tax calculator.
These calculators are easily available on a number of different websites. Besides, the calculators follow a straightforward usage method. Therefore, even if you are new to the concept of using an income tax calculator 2021, you will do great.
Additionally, there are many benefits of an income tax calculator that one can enjoy. For example, you will not have to pay for the consultation fees of your accountant. Moreover, you do not have to leave your home to meet the CA in person.
If you want to make the process of using an income tax calculator simple, then go through the mentioned steps.
Table of Contents
1. Assessment year
The first step that one needs to follow while using a simple calculator is choosing the appropriate assessment year. According to each year, there are new rules and regulations. Hence, choosing the correct assessment year is a critical factor to begin the process. Moreover, by doing so, you will also be able to save the computation correctly for the future.
2. Age category
Once you are done with the previous step, you can then move towards choosing your age category. Senior citizens get special rebates under the income tax laws of India. Therefore, every calculator that you use will have an age category available. Once you specify your age group, you will be able to learn about the correct amount that you need to file as taxes.
One of the most important steps that you need to undertake while using an income tax calculator is mentioning your earnings. This can either be the salary you draw from your employer or from other types of income groups. For example, if you have a property that is on rent, then the amount you receive is considered an income. Similarly, if you are earning interest on your FDs or bonds, then that too is added.
The next step that needs to be followed is mentioning all the deductions. These deductions can be your business and work-related expenses. Moreover, if you have been paying any sort of interests on specific loans, then those too are deductible. On the other hand, charity or amount donated to relief funds are also subjected to deductions under the income tax laws of India.
5. HRA exemptions
This might not always be a valid deduction but can be possible in certain cases. Especially, when you have been paying your EMIs against a home loan and are still living in rented accommodation. However, the property against which you are repaying your home loan should be under construction in order to claim HRA exemption.
Once you fill in all the necessary details mentioned above, you can then proceed towards calculating the amount. In certain income tax calculators, you might also be able to see other fields. This can be related to your residential status and even the taxpayers category. Moreover, if you are filing taxes for your business, then too you will be able to choose appropriate criteria through to one of these calculators.
Depending on the different income tax calculator, you will be able to see a slight variation in the usage process. However, the basics of all calculators are the same. Therefore, you will be able to get quick and accurate results if you follow the simple steps we suggested.