Filing income tax can be a long and tiring process especially when you are doing it for the first time. Further, the need to choose between the old and new regime can make the process all the more complicated for you. So, what to do? To simplify the process of filing taxes, the income tax department has launched a tax calculator.
This calculator will also help you choose which IT regime is for you. It gives you the option to calculate and compare your total tax liability in both regimes. All you need to do is submit the required information related to salary and deduction.
The old tax regime allows you to claim several deductions and exemptions while calculating the tax liability. The new regime, introduced in the Union Budget 2020-21, on the other hand, offers concessional rates. However, if you opt for the New Tax regime, you will have to forgo certain exemptions and deductions available in the existing old tax regime.
Why Use an Income Tax Calculator?
Calculating your income tax allows keeping your finances in check. Having an idea of how much tax you would be required to pay gives you a clear image to sort out your expenses and saving. Taxpayers opting for the new regime will get a rebate if their income falls under Rs 7 lakh bracket.
As per the Budget 2023 announcement, this will include a Rs 50,000 standard deduction which was also part of the old tax regime. Additionally, the basic exemption limit has been raised to Rs 3 lakh from Rs 2.5 Lakh available in the old tax regime.
So, those opting for the new tax regime will have a saving of Rs 33,800 if their income falls under Rs 7 lakh annual income bracket. And if your annual income is up to Rs 10 lakh, this saving will be Rs 23,400. The saving would shoot up to Rs 49,400 for people earning up to Rs 15 lakh annually.
How To Use Income Tax Calculator?
The income tax calculator is available on the tax department’s official website.
https://twitter.com/IncomeTaxIndia/status/1627658965441220609?s=20
While using it, you will be asked to submit the following information
– Taxpayer type
– Male / Female / Senior Citizen / Super Senior Citizen
– Residential Status
– Income other than salary and Special Rate Income
– Interest on Self-Occupied House Property ( Deductions allowed under both regimes i.e. 80CCH(2), 80CCD(2), 80JJAA, family pension deduction under section 57(iia and Deductions/exemptions (other than mentioned above) not eligible in new tax regime)
– Income From Self Occupied House Property
– Gross Total Income
– Less Eligible Income
– Total Income
Taxpayers must note that the IT department has given a disclaimer also regarding the above tax calculator. It has stated that the calculator is only to enable public to have a quick and an easy access to basic tax calculation and does not purport to give correct tax calculation in all circumstances. It is advised that for filing of returns the exact calculation may be made as per the provisions contained in the relevant Acts, Rules etc..
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