An income tax calculator is basically a tool designed to help taxpayers estimate their tax liability based on their annual income. By entering a few key information about income, age, and applicable deductions, users can find out their tax liability through the tool instantly. The tool can also help them determine the tax burden under the new and old regime and plan their tax returns accordingly.
Even the official income and tax portal features an income tax calculator AY 2024-25, where registered and unregistered e-filing individuals can determine their tax due. That said, individuals must know how to use the tool properly to make the most of its features and plan their returns filing correctly.
What is an Online Income Tax Calculator AY 2024-25?
Online income tax calculator AY 2024-25 is a financial tool designed to help users find out their annual tax liability for the assessment year 2024-25 based on their income. The user-friendly online tool weighs factors like age, income, income sources, tax credits, deductions, exemptions, and tax slabs to offer insight into tax liability.
Individuals can easily access an online tax calculator AY 2024-25 and use it for free. The tool depends on the entered variables to compute results and does not necessarily rely on any formula or manual calculation. This keeps the process simple and effective.
The easy interface and smart design of the latest tools further make complex tax calculations seem simple. The tool also allows users to make multiple adjustments which helps rectify mistakes in inputs and avail accurate input quickly. This feature also helps us understand how tax variables differ under different tax regimes. Collectively these traits and smart features make a tax calculator a practical tool for tax planning.
What are the Steps to Use an Online Income Tax Calculator AY 2024-25?
By following these steps individuals can use an online income tax calculator with ease –
Step 1: Select the assessment year for whose tax burden you wish to calculate
Step 2: Select your age. This is a crucial input as tax liability tends to differ on the basis of age groups in India
Step 3: Click on the ‘Go to Next Step’ option.
Step 4:Enter taxable salary details i.e. salary post deduction of various exemptions under HRA, LTA, etc. (This step is applicable for those who wish to determine their tax liability under the old tax slabs) Alternatively, you may enter salary without the exemptions (to know tax liability under the new slab)
Step 5: Enter interest income, interest payout on housing loans for rented-out property, rental income, and interest paid on housing loans for self-occupied property.
In case of income from digital assets enter your net income which would be sale consideration less the cost of acquisitions. This income is typically taxed @30% plus surcharge and cess.
Step 6: Click on the ‘Go to Next Step’ option
Step 7: If you wish to compute taxes under the older income tax slab, enter details of tax-saving investments that come under the purview of 80C, 80E, 80D, 80G, and 80TTA.
Step 8: Click the ‘Calculate’ option to determine tax liability. The tool will also show a summarized comparison of pre-budget and post-budget tax liability.
However, to use the tool correctly individuals should know their eligible income slabs, applicable deductions, and exemptions.
Exemptions Under both Old and New Tax Regime in India
Typically, individuals who have invested money into tax savings schemes or life cover plans are deemed eligible for deductions. Individuals need to deduct the applicable investment amount from the actual gross taxable income to determine income and applicable taxes. Subsequently, they can proceed to pay taxes. Using a tax calculator will make this step easier and quicker. However, the deductions and exemptions tend to differ from old to new tax regimes.
In the case of the old tax regime
The following deductions come under the purview of the old taxation regime –
- The deduction is set at Rs. 50000 for the salaried individuals group.
- LTA exemption available for travel purposes
- HUFs and individuals can claim a deduction of up to Rs. 1.5 lakhs under Section 80C of the Indian Income Tax Act
- Medical expenses come under the purview of tax deductions under Section 80D.
- Interest on a housing loan for self-occupied property is deemed eligible for a deduction of a maximum of Rs. 2 lakh
- High education loans are eligible for tax benefits under the purview of Section 80E
- Deductions on charitable donations are eligible for deductions under Section 80G
- Deduction of up to Rs. 10,000 on interest earned on savings accounts.
In the case of the New Tax Regime
The following tax deductions will be available to taxpayers under the purview of the new tax regime –
- Tax deductions on the annual housing loan interest payout for a rented-out property are eligible for deduction under Section 24(b)
- The contribution towards the National Pension Scheme is deemed eligible for deductions under Section 80CCD (1B) of the Income Tax act
- Interest earnings and maturity proceeds from Sukanya Samriddhi Yojana and PPF accounts are exempted from taxes. It should be noted that the new tax laws eliminate deductions for contributions made towards these avenues.
- Transport allowances for disabled individuals are eligible for deduction.
- Conveyance allowances used to meet work-related expenses are also eligible
- Remunerations to cover the cost of transfer or tour
- Indemnity paid to meet the daily costs or expenses in the absence of a regular functional duty site.
- Salaried individuals can claim a deduction of Rs. 50000 under India’s new regime. This provision was previously available to taxpayers under the old tax regime.
- Expenses for additional employees can be claimed as deductions under section 80JJA
- The contribution towards Agniveer C is also eligible
- Corpus fund under the purview of Section 80CCH is eligible for tax deductions
Notably, section 57(iia) was formed under India’s new tax regime to allow taxpayers to claim deductions related to the earnings from family pensions. They can now claim a tax deduction of one-third of the sum or nearly Rs.15000, whichever of the sum is less.
Hence, information about income, deductions, exemptions, and investments are critical to user tax calculator AY 2024-25 currently. Clear insight and access to the tool can help individuals find their tax liability and support their tax planning better.
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