How to calculate Income Tax?

Allcalculator.net The Income Tax is calculated based on the income tax slab, which is applicable for taxpayers and the net income. Steps to calculate the income tax for the financial year of 2022 – 2023 are as follows:

Calculate Gross Total Income

You can calculate the total gross income under different types of income:

Income from capital Gain – add the long-term and short-term capital gain to gross income. Be careful about the rate of tax applicable because not all capital gains are taxable at a slab rate.

Income from House Property – to calculate gross income, adds net rental income for a let-out property. You can also claim a deduction for municipal taxes paid, interest on home loan repayment, etc.

Interest in business or profession – you can add your income earned by running a business. You can claim the expenses related to business while calculating the income under this head.

Income from other sources – add income from any other sources. You can make interest income on fixed deposits, and savings bank interest gets covered under income from other sources.

Claim the exemptions and tax deductions 

Gross income has a deduction for all the exemptions and allowances available concerning the income earned.

Salary Income Exemptions, Allowances, and Deductions

• Clause 5 of section 10 contains leave travel concession
• Clause 13A of section 10 contains a house rent allowance
• Cause 14 of section 10 contains some other allowances
• Section 16 contains standard deductions for entertainment allowance and employment tax.

Rental income from House property deductions

The interest on the home loan was paid under section 24. For a home loan, deductions against home interest are applicable concerning the vacant property.

Deduction form business

• Expenses incurred about running a business
• Depreciation on assets
• Deduction for donations to scientific research
• Commission paid to the employees
• Taxes, rent, repairs, and insurance of the building

Deduction from Gross Income

The deduction of the Gross Income in Section 80C which was against:

• Public Fund 
• Employees Provident Fund
• The premium paid toward life insurance policies
• Principal repayment of home loan

Repayment of education loan and medical insurance policies for children, spouse, etc

Contribution to National Pension Scheme and also for a charitable purpose

Calculate the Net Taxable Income

The above deductions from the gross income will be the net taxable income for the financial year. 

Calculate the tax payable

Now, you can calculate the tax payable for the financial year at the income tax slab rate for FY 2022-23. Deduct the taxes paid from the total tax payable, which will be your net tax for the financial year.

What are the benefits of filing income tax online?

Filing anincome tax return online has such benefits:

• Quick and convenient
• It allows faster and more electronic tax funds
• It is confidential and secure
• Error-free and saves professional costs
• It makes it easy to avoid the late penalty
• Serves as an income and address proof
• It also helps with VISA processing, loan applications, and also to get insurance