WHAT IS INCOME TAX CALCULATOR FOR FY 2020-21 (AY 2021-22)?
As an Indian citizen, you have certain rights that are inalienable. However, your rights represent one side of the coin. Rights and responsibilities go hand-in-hand. Whether you are an individual or a business entity, paying income tax from salary and other earnings is a mandatory responsibility.
Income tax is charged on all of the income you have earned in a given financial year. Your income tax computation has to make space for income earned in the form of salary and from other sources as well. Another aspect of computation of income is the calculation of exemptions and deductions. This ITax calculation might be complicated for some people. The smartest thing to do is to calculate income tax online with the help of an accurate online income tax calculator like the IndiaFirst Life income tax calculator.
This useful ITax calculation tool can help you in the following ways:
FIND THE BEST TAX REGIME TO SUIT YOUR NEEDS
In the Union Budget 2020, the Ministry of Finance has given taxpayers a unique chance to choose between the new and old tax regimes. As such, you can decide which regime suits you better. The IndiaFirst Life new income tax calculator helps you plan your taxes, get maximum tax benefit, factor all possible deductions and exemptions, and calculate income tax online.
INPUT BASIC DETAILS FOR STRESS-FREE INCOME TAX COMPUTATION
The IndiaFirst Life income tax calculator is an online tool that uses basic but important information to help you calculate tax online. Keep information pertaining to annual salary, rent amounts paid, premiums paid, tuition/school expenses, any interest paid on education loans, and any savings that you may have put aside in FY 2020-21 (AY 2021-22) handy for quick ITax calculation using the online income tax calculator. By inputting this basic information, you can understand your total tax liability and calculate income tax online in no time.
SAVE YOUR TIME AND ENERGY
For income tax computation for FY 2020-21 (AY 2021-22), this online income tax calculator is a life-saver. With new Union Budget rules and regulations, your ITax calculation has to consider not just how much income tax from salary you would have to pay in the old regime but also in the new regime. The online income tax calculator for FY 2020-21 (AY 2021-22) will help you do just that. This taxable income calculator is a tool to help you compute your total tax liability in the new and old tax regimes in a quick and straightforward way. Take the guesswork out of it and calculate tax online.
MAKE THE MOST OF THIS FREE ONLINE INCOME TAX CALCULATOR
Use of the online IndiaFirst Life income tax calculator is completely free of cost. You can use it to calculate income tax from salary, for computation of total income, deduction and exemption tax computation, and income tax interest calculation without worrying about getting the income tax calculation formula right—the IndiaFirst Life income tax calculator is a tax saving calculator that does it all for you, and that too, for free.
This online income tax calculator gives the total tax payable amounts under the new and old tax regimes. Since the ITax calculation is done by the online income tax calculator, anyone can use this simple and convenient tool to calculate their tax liability at the click of a few buttons.
HOW TO CALCULATE INCOME TAX?
In order to calculate income tax for FY 2020-21 (AY 2021-22), you need to keep some financial details for tax computation handy. An income tax calculator for salaried individuals considers the monthly income received from an employer as the primary income source. The gross salary of any individual typically includes basic salary, dearness allowance, medical and transportation allowance, gratuity benefits, annuity benefits, and any special allowance. A part of this gross salary is taxable income after deductions.
Other income sources that need to be factored in include income earned from business or professional engagement, income from short-term and long-term capital gains, income from rent on house property, and income from other sources such as dividend income, interest earned, FD interest, and taxable gifts.
If you are opting to stay under the old tax regime, then the IT Act allows various exemptions that the tax deduction calculator will factor, including house rent allowance, leave travel allowance, and more. Standard deduction was first introduced in 2018’s budget which made place for a deduction of Rs. 40,000. This amount was later increased to Rs. 50,000 in 2019’s budget. However, none of these deductions can be availed of in the new tax regime.
The new tax regime is being touted as a simplified personal tax regime. For those who forgo specific deductions and exemptions, the new tax regime simplifies the tax calculation formula with these new tax rates:
| Taxable Income Slab (Rs.) | Old Tax Rates (%) | New Tax Rates (%) |
|---|---|---|
| 0-2.5 lakhs | Exempt | Exempt |
| 2.5-5 lakhs | 5 | 5 |
| 5-7.5 lakhs | 20 | 10 |
| 7.5-10 lakhs | 20 | 15 |
| 10-12.5 lakhs | 30 | 20 |
| 12.5-15 lakhs | 30 | 25 |
| Above 15 lakhs | 30 | 30 |
For example, if you earn Rs. 15 lakhs annually and do not claim deductions or exemptions of any kind, you stand to pay Rs. 2,73,000 as tax in the old regime, and Rs. 1,95,000 as tax in the new regime, after computation of total income.
(https://pib.gov.in/PressReleasePage.aspx?PRID=1601475)
WHAT ARE THE EXEMPTIONS/ DEDUCTIONS THAT ARE DISALLOWED UNDER THE NEW TAX REGIME?
Before you opt for the new tax regime, it is essential to understand that there are many deductions and exemptions that an individual or HUF will no longer be able to claim in the new tax computation. If you choose the computation of total income under the newly added section 115BAC in the Income Tax Act, these are some of exemptions that you are not entitled to anymore:
- HRA (House Rent Allowance) as listed under clause 13A of section 10 of the IT Act
- Leave travel allowance/concession as listed under clause 5 of section 10 of the IT Act
- Allowances listed under clause 14 of section 10 of the IT Act
- Allowances made for income earned by minors as listed under clause 32 of section 10 of the IT Act
- Allowances granted to MPs and MLAs as listed under clause 17 of section 10 of the IT Act
- Tax exemptions availed of by SEZ units as listed under section 10AA of the IT Act
- Deductions listed under section 16 of the IT Act which include standard deductions, employment or profession tax deductions, and allowances made for entertainment deduction
- Interest under section 24 of the IT Act with respect to self-occupied or vacant property as mentioned in sub-section 2 of section 23. In addition, any potential loss under the heading ‘income from house property for the rental house’ can no longer be adjusted under any other heading. It will have to be carried forward under the existing law.
- Additional depreciation as listed under clause ii-a of sub-section 1 of section 32 of the IT Act
- Any deductions listed under section 32AD, 33AB, and 33ABA of the IT Act
- Any deductions offered for donations paid or expenditure on scientific research as listed in sub-clause ii/ii-a/iii of sub-section 1 or sub-section 2AA of section 35 of the IT Act
- Any deduction under section 35AD or 35CCC of the IT Act
- Any deduction from family pension as listed under clause ii-a of section 57 of the IT Act
- Any deduction under chapter VIA (like section 80C, 80CCC, 80CCD, section 80D, section 80DD, section 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, etc). There are a couple of exclusions to this rule—deductions listed under sub-section 2 of section 80CCD which refers to employer contribution for the employee in notified pension scheme, and section 80JJAA pertaining to new employment can still be claimed in the new tax regime.
HOW DO I CALCULATE INCOME TAX FROM SALARY?
You can calculate income tax from salary based on the tax slab you fall under in the old and the new regime. In the old regime, the income tax computation would take into account your gross income and any exemptions/deductions claimed under section 80C of the Income Tax Act of 1961. A salary tax calculator can help you calculate tax online making the process of income tax computation an easy one for you.
In the new regime, the process of calculating income tax from salary remains the same. However, the new income tax calculator would take into account only the tax slab you fall under and the limited exemptions that are acceptable under the new tax regime.
You could work out the math by applying the income tax calculation formula for computation of income from salary. However, this can be a tedious and time-consuming process. Use the IndiaFirst Life income tax calculator to calculate taxes in minutes. The online income and tax calculator are free to use and can quickly crunch the numbers for you.
WHICH TAX REGIME IS BETTER FOR ME?
After computation of income, calculate tax online with IndiaFirst Life’s online income tax calculator. This will help you see which tax regime presents the maximum benefits for you. Budget 2020 has left the option of both regimes open for taxpayers. The primary goal of the new tax regime is to simplify personal ITax calculation and payments. For those who do not claim any exemptions or deductions, the new regime offers a lowered tax rate depending on your income tax slab.
However, in order to do this, the taxpayer would have to let go of a number of exemptions and deduction benefits, including the standard deduction of Rs. 50,000, HRA, LTA, housing loan interest, PPF contribution, premiums paid towards life insurance policies, investments made in Equity Linked Savings Schemes (ELSS), etc. All of these deductions could stand to save you a substantial sum in the old tax regime.
There is no one-size-fits-all answer to this old vs. new tax regime question. It depends on your current tax slab and whether you are ready to give up the benefits of the old regime. Evaluate both options, calculate income tax online with the help of the online income tax calculator to arrive at the best option for you.
CAN I SWITCH BETWEEN TAX REGIMES?
Yes, an individual taxpayer has the option to switch between the old and new regimes year-on-year. If you are a salaried professional or a pensioner, you can us the new tax calculator to check how much you would save in either tax regime. Make an informed choice after consulting the online taxable income calculator.
If you change your mind next year, you can switch to the other tax regime option, and back again in the next financial year. However, business income earning taxpayers do not have this switching option. So, as long as you are not earning any business income, you are free to make the switch.
HAS THE 80C EXEMPTION BEEN SCRAPPED?
No. The deductions that you can avail of under Section 80C have not been scrapped. They are still available for those who choose to file under the old tax regime. However, after computing your tax liabilities using the new income tax calculator, if you choose to file under the new tax regime, then deductions under section 80C can no longer be claimed by you in that tax year.
