How To Calculate Income Tax? Here's Step-By-Step Guide To Maximize Your Savings

How To Calculate Income Tax: In the last Union Budget, Nirmala Sitharaman revised the income tax rates under the New Tax Regime and increased the standard deduction from Rs 50,000 to Rs 75,000

How To Calculate Income Tax? Union Finance and Corporate Affairs Minister Nirmala Sitharaman unveiled the Budget 2024 on July 23, bringing notable changes to the income tax structure. Among the key announcements, Sitharaman revised the income tax rates under the New Tax Regime and increased the standard deduction from Rs 50,000 to Rs 75,000.

These changes are expected to benefit salaried taxpayers significantly, with potential savings of up to Rs 17,500 on income exceeding Rs 15 lakh. The savings result from adjustments across various income slabs and the enhanced standard deduction.

Revised tax rates under new tax regime

Rs 0-3 lakh	Nil
Rs 3-7 lakh	5%
Rs 7-10 lakh	10%
Rs 10-12 lakh	15%
Rs 12-15	20%
Rs15 lakh & above	30%

Here's how you can use the Income Tax Calculator for FY24-25

Taxpayers can calculate their tax liability using the methods in the following:

Select Financial Year: Choose the financial year for which the taxes need to be calculated.

Choose Age Group: Select your age group as tax liability in India varies based on age.

Proceed to the Next Step: Click 'Go to Next Step'.

Enter Taxable Salary

For old tax slabs: Enter your taxable salary after deducting exemptions such as HRA and LTA.

For new tax slabs: Enter your salary without considering exemptions.

Provide Additional Income Details: Include other income details like interest income, rental income, and interest paid on home loans.

Income from Digital Assets: Input the net income from digital assets, which is taxed at 30 per cent plus applicable surcharge and cess.

Proceed Again: Click 'Go to Next Step'.

Tax Saving Investments (Old Tax Slabs): If using old tax slabs, enter tax-saving investments under sections 80C, 80D, 80G, 80E, and 80TTA.

Calculate Tax Liability: Click 'Calculate' to determine your tax liability. The calculator will also provide a comparison of your pre-Budget and post-Budget tax liabilities under both old and new tax slabs.

These changes aim to simplify the tax filing process and offer significant relief to taxpayers, aligning with the government's focus on ease of doing business and economic growth.

How to calculate your income tax refund

If you paid more taxes than required, you can claim the additional amount as an income tax refund using the formula:

Income Tax Refund = Taxes paid – Total tax liability

The income tax department will recompute the taxes and validate the refund claim before initiating the refund.