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How to calculate income tax


 How to calculate Income Tax

Every year Government gives tax slabs based on these tax we calculate tax on our income earned.

Income Tax slabs for financial year 2024 -2025

  Income earned                       Tax percentage

0 - 3,00,000 lakh rupees.           0%

3,00,000 - 7 lakh rupees.            5%

7 - 10 lakhs rupees.                     10%

10 - 12 lakhs rupees.                    15%

12 - 15 lakhs rupees.                    20%

15 lakhs and above.                      30% 


Taxable income = Gross Salary - Deductions

Income Tax = Taxable income * Tax rate


If you earn upto 3 lakhs  tax on your income is 0 (zero) because tax rate for income upto 3 lakhs is 0 %.


Example if a person earns 9 lakhs per year then 

For 0 - 3,00,000 lakhs rupees is has to pay no tax i.e 0 rupees.

And for 3,00,000 - 7 lakhs rupees he has to pay 5% of his income that is

7 minus 3 is 4 so for  4 lakhs 5 % is 

      4,00,000 *5 /100= 20,000

   So he has to pay 20,000 rupees tax

And for 7 lakhs - 9 lakhs 

   9 minus 7 is 2 so tax slab for this income is 10%.

    2,00,000 *10/100= 20,000

So tax is 20,000 rupees

So Total tax for 9 lakhs rupees annual income is 20,000 +20,000= 40,000 rupees.


Surcharge : 

Surcharge is the amount to be paid by tax payer on amount of tax he paid.

That is simply Tax on amount of Tax paid.

For example if you pay tax amount of 

1 lakh rupees then if surcharge rate is 10% then you need to pay 10,000 rupees as surcharge that is additional tax.

Surcharge  rate on different income

If your net tax amount is less than 50 lakhs then there is no surcharge.

Surcharge rates

0 to 50 lakhs no surcharge

50 lakhs to 1 crore surcharge rate is 10%

1 crore to 2 crore surcharge rate is 15%

2 crore to 5 crore surcharge is 20%

5 crore and above surcharge is 37% under old tax regime but under new tax regime it is 25%.


Tax rebate is a tax relief provided to individuals, particularly those in the lower-income bracket to ensure that they are not burdened with income tax if their income is below a certain threshold. 

A tax rebate is available on income up to Rs. 7 lakh under the new tax regime and up to Rs. 5 lakh under the old regime.

Rebate u/s 87A for FY 2024-25 (AY 2025-26)

The rebate under Section 87A is available to individual taxpayers whose income does not exceed the specified threshold. The limit is Rs. 7 lakh under the new tax regime and Rs. 5 lakh under the old regime. If your income falls within these thresholds, your tax liability will be reduced to zero.


Section 80C: This section provides a deduction of up to Rs. 1.5 lakh for investments in specified instruments such as EPF, PPF, NSC, ELSS, tax-saving fixed deposits, etc.


Section 80CCC: This section provides a deduction for contributions made to annuity plans of LIC or any other insurer for receiving pension.



Section 80CCD(1): An income tax deduction for contributions made by individuals to eligible NPS


Section 80CCD(1B): Additional Income tax deduction for contributions made by individuals to eligible NPS


Section 80CCD(2): An income tax deduction for contributions by an employer to eligible NPS


Section 80 D   is amongst the most popular tax-saving options. Under this tax, the benefit is admissible for
  1. Medical Insurance Premiums
  2. Expenditure on Preventive Health Check-up
  3. Other Medical Expenditure

Section 80DD: Income Tax Deduction for Medical Treatment of a Dependent with Disability


Section 80DDB: Income Tax Deduction for Specified Diseases


Section 80E: Income Tax Deduction for Interest paid on Higher Education Loan


Section 80EE: Income Tax Deduction for Home Loan


Section 80EEA: Income Tax Deduction for first time home buyers


Section 80 EEB : Income Tax Deduction for Repayment of Electronic Vehicle Loan


Section 80G: Deduction in respect of donations made to specified funds and charitable institutions etc


Section 80GG: Income Tax Deduction for House Rent Paid


Section 80GGA: Income Tax Deduction for Donation towards Scientific Research & Rural Development


Section 80GGB : 

Income Tax Deduction for Donation to Political Parties


Section 80GGC: Income Tax Deduction in respect of contributions given by any person to Political Parties


Section 80RRB: Income Tax Deduction for Royalty on Patents


Section 80QQB: Income Tax Deductions for Royalty Income of Authors


Section 80U: Income Tax Deduction for Disabled Individuals


Section 80TTA: Deduction in Respect of Interest on Deposits in Savings Account


Section 80TTB: Deduction in respect of interest from deposits held by Senior Citizens



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