New to paying taxes? Here’s how an income tax calculator can help

Here’s how an income tax calculator can help

If you’ve been working for a while now, whether it’s a salaried job or a full-fledged business, you’ll know what each year-end means: tax filing time!

While some winning people will already be ahead of the rest with their investments calculated and saving the tax in place, there are many who don’t quite understand how to get started in the first place.

Why go to professionals and pay them hefty fees to run numbers when you can do it at home using an income tax calculator for absolutely zero cost.

Some time ago, the government announced a new tax regime which provides for different exemptions and different tax brackets applicable to employees and businessmen. Now you might be wondering how you are going to eventually calculate taxes under the old and new regimes and determine which one is best for you.

Don’t worry, the income tax calculator does all the work for you, and it does it in seconds, too.

Understand how an income tax calculator works

Nowadays, it is not only investment plans and insurance policies, but also calculators that are available online, and also for free!

Just like insurance and premium calculators, there are income tax calculators designed to calculate your taxes for each fiscal year and help you plan your taxes accordingly.

Using an income tax calculator, you can determine how much tax you will need to pay for the current year and start your tax investments based on the calculations. This step-by-step guide will highlight some tax calculator rules and help you calculate your income tax in no time:

  1. Annual revenue

The calculator asks you for your annual income on the first step, which is the amount you earn or set out to earn in the current fiscal year. If you are unsure of your income for 12 months, you can use your payslips or add up invoices (if you are a professional or self-employed) and calculate your income.

  1. Your current expenses

From renting your apartment to the EMI home loan and paying your children’s school fees to paying the children’s education loan, whatever expenses you incur, be sure to include them in the tax calculator. .

  1. Savings & EPF

There are many types of savings and investment instruments such as ULIP, PPF, MF, Gold, NSC, ELSS and even insurance plans just to name a few. Make sure you put them all into the calculator wherever you are asked, as this will make the calculator’s job easier by showing you how a tax deduction can be claimed.

For example, most Indians opt for term life insurance policies, and the policyholder gets not only the financial security and coverage they want, but also the tax benefits of term insurance. However, what people forget is the fact that the premiums paid to this insurance plan can be claimed as a tax deduction every year.

  1. Calculation

After filling in all the fields, the calculator will calculate your taxes according to the old and the new regime. Additionally, some income tax calculators also show you different tax saving tools and programs that you can start investing in.

How Can an Income Tax Calculator Help You?

Income tax calculators are very useful when tax calculations need to be done for the entire fiscal year. Also, before you start investing in your tax saving plan, it’s best to know how much of the deduction you can claim when filing your taxes, and then start saving accordingly. Here are some of the ways an income tax calculator can come in handy when it comes to planning your taxes-

  1. Income tax calculators are available online for free
  2. It does not take more than a few seconds to get the tax calculation on the calculator
  3. As it is automated, the risk of human error is eliminated
  4. You can try out various permutations and combinations on this calculator and compare different investment options, with just a few clicks.
  5. Tax calculators can save you a lot of time and effort not only by calculating tax under the old and new regimes, but also by showing you investment tools to help you plan your savings better. tax.

Like everything that has gone digital in the world, income tax calculators are no slouch either!

According to the Income Tax Act of 1961, you can claim a deduction of up to Rs. 150,000 in your taxes. You can simply check your tax payable for the current fiscal year and find out the amount of the deduction applicable to your tax bracket. Get a head start on your tax planning during the year, so you don’t have to burn yourself out to save tax when the year comes to an end.

Esther L. Steinbach