Income tax is the amount of money we pay to the government against our income. For calculating it, first you should find your taxable income. This includes your total salary + various allowances + interest paid for home loan + deductions under chapter VI A (80 C, 80 CCC etc). Fill all these information in form 16.
Income tax is exempted for the following :
i) Male salary upto 2 lakh and age under 65 years.
ii) Female salary upto 2 lakh and age under 65 years.
iii) Upto 5 lakhs for senior citizens.
Tax is levied as :
- 10% for taxable salary upto 5 lakhs.
- 20% for taxable salary from 5 - 10 lakhs.
- Beyond 10 lakhs it is 30%.
For example if you are a male of age 35 years, then ;
Salary Income (A) = 1000000.
Exemption under section 10 (B) = 50000.
Salary minus exemption (C = A - B) = 950000.
Deductions under chapter VI - A (D) = 150000 [80C].
Taxable income (E = C - D) = 800000.
Tax on above taxable income is calculated as below :
Exemption (F) = 200000.
Tax upto 3 lakh (3 lakh - F) * 10%. (G) = 10000.
Tax for slab 3 - 5 lakh (200000 * 20%) (H) = 40000.
Tax for slab above 5 lakh (F - 500000) * 30% (I) = 90000.
Total tax (G + H + I) = 140000.
So, Rs140000 is the total Income tax calculated against the total income.
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