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

Medical Insurance Premiums
Expenditure on Preventive Health Check-up
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 :

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