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Income Tax Calculator : FY 2022 - 23 & AY 2023 - 24

An Income Tax Calculator is a useful tool which helps the individuals or assesses to known the exact amount of tax which he/she has to pay as a part of income tax during a particular financial year. The tool helps the individuals to avoid discrepancies at the time of filing their returns. One can use the online income tax calculator to arrive at the exact income tax amount which is payable by the assessee to the government.

Income Tax Sections

The Income Tax is a direct means of taxation similar to the securities transaction tax, capital gains tax and so on. The citizens of India bear other types of indirect tax like octroi, GST, sales tax and so on. The tax which pay for the government forms the largest revenue and the revenue functions are managed by the Ministry of Finance, which has the authority to manage direct tax and includes wealth tax, income tax, and so on to the Central Board of Direct Taxes (CBDT).

How to calculate Income Tax of an Individual?

An individual needs the following list of components to calculate the Income Tax for a particular financial year and they include Gross Salary, House Rent Allowance (HRA), Transport Allowance, Special Allowance, Deductions under Section 80C, 80CCC, 80CCD, 80CCF, 80CCF, 80CCG, 80D and so on.

The income tax of an individual is calculated on a yearly basis despite monthly earnings.

The government of India mainly collects taxes in three of the following ways:

  1. Taxes Deducted at Source (TDS) which is usually deducted from individuals salary before he/she receives it.
  2. Voluntary payment of tax by tax payers like self – assessment tax and advance tax.
  3. Tax Collected at Source (TCS) – a form of income tax which is payable by the seller who in turn collects the same from the buyer.

The total taxable income from an individual’s salary is computed after all the applicable deductions are made and these include HRA, Leave Travel Allowance (LTA), interest on the home loan which is adjusted from the total income is deducted from the gross salary for the financial year.

Total taxable income includes gross salary + income from other sources.

The income of an individual from salary includes Basic Salary, House Rent Allowance (HRA), Special Allowance, Dearness Allowance (DA) (only for government employees, public sector employees and pensioners in India), Transport Allowance and Other Allowances. Some of the allowances are exempt from income tax and an individual is eligible to claim for exemption from the total taxable salary.

For Example: The house rent allowance of an individual who lives in a rented house is eligible for the exemption up to a certain level based on the city wherein the individual resides.

The income tax for an individual is based on the slab under which the taxable income falls + 3% Cess. For this purpose, taxpayers have to first understand the tax slabs for the financial year 2018 – 2019 for individuals who are aged below 60 years. These tax slabs are subject to change on a yearly basis.

Tax Slabs for Individuals Below 60 Years

Income Tax Slab
Up to Rs 5 Lakhs No Tax
Between Rs 5 Lakhs – Rs 7.5 Lakhs 10 percent
Between Rs 7.5 Lakhs – Rs 10 Lakhs 15 percent
Between Rs 10 Lakhs – Rs 12.5 Lakhs 20 percent
Above Rs 15 Lakhs 30 percent
  • An additional Health and education cess of 4% will be applicable on the tax amount.

For Example: If the taxable income of an individual is Rs 7 lakhs, then there will be no tax till Rs 5 lakhs (7 lakhs – 5 lakhs = 2 lakhs). Remaining 2 lakh will be taxed at the rate of 10 percent + 4 percent cess.

What is Assessment Year under Income Tax Act?

As per the Income Tax Act of 1961, Assessment Year refers to a period of 12 months which starts from April 1 of every year and ends on March 31 of the following year. An assessee is required to file the returns of income for the previous year.

What is the Financial Year under Income Tax Act?

The Financial Year (FY) is the year during which an assessee will earn an income. It is also referred to as the previous year. Under the Income Tax Act, the assessee will file the returns after the end of the year or the period during which earnings are made and that period of time is known as the financial year or previous year.
The Assessment Year follows the Financial Year. Both the financial year as well as assessment year will begin on April 1 and will conclude on March 31. Income of an individual will be earned during financial year and taxes on the same will be paid during the assessment year.

Financial Year and Assessment Year

Period Financial Year Assessment Year
April 1, 2017 – March 31, 2018 2017 – 2018 2018 – 2019
April 1, 2018 – March 31, 2019 2018 – 2019 2019 – 2020
April 1, 2019 – March 31, 2020 2019 – 2020 2020 – 2021
April 1, 2020 – March 31, 2021 2020 – 2021 2021 – 2022

Difference Between Assessment Year and Financial Year

The financial year is the period (12 months) wherein the individual will earn income. The assessment year is the year which follows the financial year and this is the period wherein one has to evaluate the previous year’s income and has to pay taxes on it.

For Example: If the financial year is between April 1, 2018, to March 31, 2019, then this will be referred to as FY 2018-19. The assessment year for the income earned during this period will begin after the end of the financial year (April 1, 2019 – March 31, 2020) and hence the assessment year will be AY 2019-20.

Tax Slabs for Individuals Aged between 60 – 80 Years

Income Tax Slab
Up to Rs 3 Lakhs No Tax
Between Rs 3 Lakhs – Rs 5 Lakhs 5 percent
Between Rs 5 Lakhs – Rs 10 Lakhs 20 percent
Above 10 Lakhs 30 percent
  • An additional Health and education cess of 4% will be applicable on the tax amount.

Tax Slabs for Super Senior Citizens Individuals Aged above 80 years or more

Income Tax Slab
Up to Rs 5 Lakhs No Tax
Between Rs 5 Lakhs – Rs 10 Lakhs 20 percent
Above 10 Lakhs 30 percent
  • An additional Health and education cess of 4% will be applicable on the tax amount.

Interim Budget 2019

The interim budget which was announced by the Union Minister, Piyush Goyal proposed that the salaried individuals who have an annual income of less than Rs 5 lakh per annum need not have to pay any income tax.

Individuals who are having a taxable annual income of up to Rs 5 lakh will get full tax rebate and if the taxpayers fully utilize the deductions which are permitted under Section 80C of the Income Tax Act of 1964, then those whose gross income which is up to Rs 6.5 lakhs will no longer have to pay any tax.

However, the tax slabs of the individuals as well as senior citizens remained the same and untouched. The proposed income tax rebate will come into effect from April 1, 2019, after seeking nod in the Parliament.

Standard Deduction

The term standard deduction refers to the fixed deduction from the income of salaried employees irrespective of the position they hold in an organization. As a fixed amount of money is deducted from their annual salary, it reduces the taxable income and hence the total amount of tax paid toward the government will also decline. Both salaried, as well as pensioners, can avail Standard Deductions.

Currently, individuals can avail Rs 50,000 per annum as standard deductions from their total annual income every year up from the previous amount of Rs 40,000 per annum.

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