Tax Calculation in India

Tax Calculation in India is the method for calculating the amount of tax for different individuals. Any individual income i.e., income of a public sector employee and income of private sector employee is taxable under the Income Tax Act of India. The tax calculation in India is done on the basis of the income of an individual under various defined heads of income, as mentioned in the 4th chapter of the Income Tax Act, 1961 (Section 14)

The different heads of income for tax calculation in India:

• Salary
• House property
• Profit in business or profession
• Capital gains
• Other sources

Tax calculation in India:

• In case the individual income is Rs. 300,000
  
  As per the income tax slab, the first Rs. 100,000 is not taxable For the next Rs. 50,000 of the income, the rate of tax deduction is 10% (Rs. 5,000 in this case). For the remaining income of Rs. 150,000 the rate of tax deduction is 20%. 20% of Rs. 150,000 equals to Rs. 30,000. So the total income tax to be paid is Rs. 5,000 + Rs. 30,000 which is equal to Rs. 35,000.
• In case the individual income is Rs. 300,000 and the person is a woman


As per the income tax slab, the first Rs. 135,000 is not taxable. For the next Rs. 15,000 of the income, the rate of tax deduction is 10% (Rs. 1,500 in this case). For the remaining income of Rs. 150,000, the rate of tax deduction is 20% which in this case is Rs. 30,000. The total income tax to be paid therefore is Rs. 1,500 + Rs. 30,000 which is equal to Rs. 31,500.
• In case the individual income is Rs. 300,000 and the person is a senior citizen above the age of 65 years

As per the income tax slab, the first Rs. 185,000 is not taxable. For the next Rs. 65,000 of the income, the rate of tax deduction is 20%, which in this case is Rs. 13,000. For the remaining income of Rs. 50,000 i.e., Rs. 300,000-Rs. 250,000, the rate of tax deduction is 30%, which in this case is Rs. 15,000. The total income tax to be paid is Rs. 13,000+Rs. 15,000 which is equal to Rs. 28,000.

In all of the above 3 cases, if the individual claims for an exemption or rebate, the amount will be deducted from his or her income before the computation of the tax amount under the Income Tax act.

Important points under tax calculation in India:

• A surcharge at the rate of 10% is charged if the total income is above Rs. 10 lakhs
• Under the new section 80C, any individual can claim a rebate upto Rs. 1,00,000 against contributions to provident fund, premium for insurance and other such schemes
• A deduction in the tax can be availed for a maximum of 8 years in case of higher education
• Cess on education is charged at the rate of 2% on the tax including the surcharge