Know About Income Tax Calculator FY 2020-21

What do you mean by Income Tax Calculator?

The income tax calculator is an easy-to-use online tool to estimate your taxes on your earnings following the presentation of the Union Budget. Use a tool that has been updated to reflect the revenue tax changes proposed in the FY 2020-21 budget.

Who Should File Income Tax Returns?

If an individual’s income is less than the minimum deduction cap, he or she does not require submitting income tax returns. If the salary is less than Rs 2.5L and the income-tax refund is claimable, the rebate can only proceed by filing an ITR. In any other case, the filing of income tax returns is compulsory.

Factors such as your marital status and that you have dependents decide your filing rights. The IRS has 5 of them with various qualification requirements, standard deductions, income tax rates, and eligibility for credit and deduction.

How do I calculate taxable income?

This is how your taxable income can be calculated:

For the fiscal year 2020-21, the taxpayer has a choice between the new taxation scheme and the old one. To know the tax system that is beneficial to a person, it is important to know the extent of tax liability in both regimes.

On 1 April 2020, the current income tax law came into effect. The option of continuing with the current tax regime (by tax exemptions and deductions) and of opting for a new tax regime without 70 exemptions and deductions is thus given to an individual taxpayer. Also, every financial year, employing individuals with no business income have to pick, according to their choice, from current and new tax schemes.

On the other hand, those with business revenues should carefully assess if they want to continue or opt for the new tax system. Once you decide on the new tax regime, you can only switch back to the current tax regime once a lifetime.

It is necessary to know how much tax responsibility you have under all jurisdictions to pick between the two tax systems.

Steps to Calculate your Income Tax:

1. In the first step, calculate your gross salary with the addition of all the taxable salary components-Basic pay rate, Dearness Allowance, HRA, Special allowances, etc.
2. Once the amount is received, add additional interest income, property rental, incentives, and other profits.
3. Add capital gains from all assets-equity or debt instruments, property, shares, etc.
4. Exclude all deductions from the gross income, regular deduction from €50.000/-, HRA exemption.
5. Further exclude basic deductions in compliance with Sections 80C, 80D, or other relevant deductions if applicable.
6. Your net taxable income is your income.

Final Thoughts:

To calculate whether you profit from opting for new taxes or staying with the current tax system, using this income tax calculator.