How to calculate Income Tax on Salary in India with Example.
26 Jun 2024 4 mins Tax Planning
This guide will walk you through the process of how income tax is calculated on salary in India, covering essential aspects like Taxable income, deductions, PAN card, income tax e-filing, and more.
Steps to Calculate Income Tax on Salary
Step 1: Determine Your Total Income
Your total income includes your salary, any bonuses, rental income, income from shares and mutual funds, and other sources of income. You can download Form 26AS from the income tax portal to check your annual income details.
Step 2: Apply Deductions
Various deductions can be claimed under sections like 80C, 80D, and 80G. Use an income tax calculator to estimate your taxable income after deductions.
You can deduct insurance payments, NPS, ELSS contributions along with the donations you have made to organizations and political parties.
There are certain limits to every deduction and you can check them on the above calculator.
Step 3: Compute Tax Payable
After subtracting all your deductibles from your gross income, you get taxable income. Now subtract 50,000 Rs. from your taxable income which is standard deduction. You will get the final taxable income on which below income tax will be applied.
HEAD ON TO THIS INCOME TAX CALCULATOR AND CHECK YOUR LIABILITY -
https://www.credyfi.com/calculator/income-tax-calculator
Step 4: Filing Income Tax Returns
Log in to the income tax e-filing portal to submit your returns. Ensure all details are accurate to avoid penalties.
Income Tax Filing 2024: Key Dates and Deadlines
The deadline for filing income tax returns for the fiscal year 2023-24 is typically July 31, 2024. Make sure to e-pay tax if you have any outstanding liabilities.
Linking PAN with Aadhar
The Government mandates linking your PAN with Aadhar for seamless tax filing. You can link PAN with Aadhar through the income tax portal by logging in and following the instructions.
Using the Income Tax Calculator
An income tax calculator is a useful tool to estimate your tax liability. You can use this calculator to find out your tax liability for this year.
https://www.credyfi.com/calculator/income-tax-calculator
Logging into the Income Tax Portal
For all income tax-related activities, including e-filing, paying taxes, and checking Form 26AS, you need to log in to the income tax portal,
Common Queries About Income Tax on Salary
What is Form 26AS?
Form 26AS is a consolidated tax statement that shows the details of tax deducted at source (TDS) for various transactions.
How to Download Form 26AS?
You can download Form 26AS from the income tax portal after logging in. It provides a comprehensive view of your tax credit.
What Are the Current Income Tax Slabs?
The income tax slab for FY 23-24 outlines the tax rates applicable based on your income. Stay updated with any changes for AY 24-25.
Conclusion
Understanding how income tax is calculated on your salary in India is crucial for effective financial planning. Ensure you have your PAN card, link it with Aadhar, and use the income tax portal for all your tax-related needs. Stay informed about the income tax slab for FY 23-24 and AY 24-25 to accurately compute your tax liability.
For more information, visit the official income tax website, incometax.gov.in, and keep track of updates for income tax returns 2024. Happy filing!
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Author - Abhishek Sonawane
Abhishek Sonawane, an MBA graduate from the prestigious Indian Institute of Management Visakhapatnam(IIMV), brings over ten years of experience in the finance domain. His extensive background includes various roles in financial management and strategy, providing him with a comprehensive understanding of the financial landscape. Abhishek’s expertise and dedication to financial education make him an authoritative voice in personal finance, helping readers make informed financial decisions.
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