New and old regime income tax slabs for YY 2021-22
An income tax calculator is a digital tool that you can use to calculate your tax payment for the relevant fiscal year. It takes into account variables such as your total income, age, deductions and mortgage payments, and instantly estimates your tax liability. It is a powerful tool as tax calculations can be complex as there are many tax laws involved. Simply coming up with your taxable income can be difficult. Nonetheless, an income tax calculator generates error-free results within moments. To find out how it works, find out how income tax is calculated in India.
How is income tax calculated in India?
Income tax is calculated based on 2 major factors: your taxable income and the applicable tax base. However, since the Union budget 2019-2020, another factor to take into account is the tax regime you choose. Your taxable income and your tax brackets are subject to change depending on the plan you choose.
Under the old tax system, you get your taxable income by adding your salary income, capital gains, real estate, business / profession and other sources and subtracting deductions such as sections 80C and 80D and exemptions such as HRA and LTA. When you use an income tax calculator, it all happens behind the scenes. Then your taxable income is taxed at the old tax rates. Depending on your age and your taxable income, the corresponding tax rate will apply.
Under the new tax regime, you waive most exemptions and deductions. In this case, you just need to add your income from salary, capital gains, real estate, business / profession and other sources to get your taxable income. This is then taxed according to the rate of the applicable tax slab. The new flat tax rates are concessional, that is, they are often lower in various income categories.
What Are Income Tax Slabs?
Under the Ancien RÃ©gime
For taxpayers under the age of 60
For senior taxpayers – between 60 and 80 years old
For super-senior taxpayers – aged 80 and over
Under New Regime
What is the tax-free income limit?
Under the old regime, you are exempt from tax if your taxable income does not exceed Rs.2.5 lakh if ââyou are an ordinary citizen, Rs.3 lakh if ââyou are an elderly person and Rs.5 lakh if ââyou are a super elderly person. In the case of the new regime, regardless of age, the tax-free limit is Rs.2.5 lakh.
Nonetheless, there is a discount of up to Rs.12,500 offered by section 87A if your taxable income does not exceed Rs.5 lakh. So under both regimes zero income tax can be paid if your taxable income does not exceed Rs. 5 lakh.
How to use an AY 2021-22 income tax calculator?
First, open an online income tax calculator. Then:
Choose your age group
Disclose your annual income (salary, other sources, etc.)
Indicate the allowable deductions / exemptions, such as:
â HRA and LTA
â 80E (Interest on education loan)
â 80C (PPF, ELSS, mortgage principal, etc.)
â 24B (Interest on mortgage loan)
* Enter “0” for fields that are not applicable.
To claim mortgage tax deductions, keep your mortgage certificate handy. With offers like Bajaj Housing Finance Limited home loan, you can download your certificate from the digital customer portal. Here you also benefit from sufficient financing with flexible duration and attractive interest rates.
Now that you know how an income tax calculator helps with tax planning, make a commitment to be more tax efficient in the years to come!
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Posted on: Thursday April 29, 2021 12:39 IST