Tax Calculation
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Tax calculation in India is the procedure of working out the amount of tax payable for various individuals. As stipulated by the Income Tax Act, 1961, income of both public and private sector employees is taxable.
Tax calculation in India is carried out on the basis of the earnings of an individual under different income heads (as prescribed in Chapter 4 of the Income Tax Act, 1961, u/s 14). These heads are:
Income Tax Rates for financial year 2010-2011
Given below are the income tax rates for men, women, and senior citizens for the financial year 2010-2011:
For Men
For Women
For senior citizens/resident individuals of 65 years or above
As per budget tabled on February 26, 2010, Union Finance Minister Pranab Mukherjee suggested amendments for income tax rate slabs as mentioned above. Other than the present investment amount of ` 1 Lakh, extra ` 20,000 will be tax exempt, if the same amount has been invested in long-term infrastructure bonds.
Indian tax calculation in seven easy steps
You can calculate your income tax by following the simple steps given below:
Step 1: Calculate your Gross Income
Gross Income = Monthly Income x 12
Step 2: Determine your Charity/Donation amount (if any)
Donations here refer to the amount contributed to any organization(s) in the form of charity, which should be in compliance with the Income Tax Regulations.
Step 3: Work Out your Savings
It takes into consideration all your savings and investments that are included in the sections under Income Tax Rebates.
Step 4: Evaluate your Taxable Income
Taxable Income = Gross Income - (Savings + Donations/Charity)
Or
Step I - (Step II + Step III)
Step 5: Figuring Out the Income Tax
Now that you have determined your taxable income, you may consult the Income Tax Slab for working out the income tax.
Step 6: Include Surcharge
You need to include a surcharge of 10% of your yearly income to the amount of income tax that you have figured out in the previous step. This will be the amount of your new income tax. (N.B: This step is not relevant if the yearly income is less than ` 10 lakhs.)
Step 7: Include the Education Cess
You need to add 3% of your taxable earnings (as education cess) with the new income tax amount that you have figured out in Step 6 mentioned above.
Last Updated on 2/3/2011
- Income from business or profession
- Income from salary
- Income from capital gains
- Income from residential property
- Income from other sources
Income Tax Rates for financial year 2010-2011
Given below are the income tax rates for men, women, and senior citizens for the financial year 2010-2011:
For Men
| Upto ` 1,60,000/- | Nil |
| ` 1,60,001/- to ` 5,00,000/- | 10 per cent |
| ` 5,00,001/- to ` 8,00,000 | 20 per cent |
| Greater than ` 8,00,000/- | 30 per cent |
For Women
| Upto ` 1,90,000/- | Nil |
| ` 1,90,001/- to ` 5,00,000/- | 10 per cent |
| ` 5,00,001/- to ` 8,00,000 | 20 per cent |
| Greater than ` 8,00,000/- | 30 per cent |
For senior citizens/resident individuals of 65 years or above
| Upto ` 2,40,000/- | Nil |
| ` 2,40,001/- to ` 5,00,000/- | 10 per cent |
| ` 5,00,001/- to ` 8,00,000 | 20 per cent |
| Greater than ` 8,00,000/- | 30 per cent |
As per budget tabled on February 26, 2010, Union Finance Minister Pranab Mukherjee suggested amendments for income tax rate slabs as mentioned above. Other than the present investment amount of ` 1 Lakh, extra ` 20,000 will be tax exempt, if the same amount has been invested in long-term infrastructure bonds.
Indian tax calculation in seven easy steps
You can calculate your income tax by following the simple steps given below:
Step 1: Calculate your Gross Income
Gross Income = Monthly Income x 12
Step 2: Determine your Charity/Donation amount (if any)
Donations here refer to the amount contributed to any organization(s) in the form of charity, which should be in compliance with the Income Tax Regulations.
Step 3: Work Out your Savings
It takes into consideration all your savings and investments that are included in the sections under Income Tax Rebates.
Step 4: Evaluate your Taxable Income
Taxable Income = Gross Income - (Savings + Donations/Charity)
Or
Step I - (Step II + Step III)
Step 5: Figuring Out the Income Tax
Now that you have determined your taxable income, you may consult the Income Tax Slab for working out the income tax.
Step 6: Include Surcharge
You need to include a surcharge of 10% of your yearly income to the amount of income tax that you have figured out in the previous step. This will be the amount of your new income tax. (N.B: This step is not relevant if the yearly income is less than ` 10 lakhs.)
Step 7: Include the Education Cess
You need to add 3% of your taxable earnings (as education cess) with the new income tax amount that you have figured out in Step 6 mentioned above.
Last Updated on 2/3/2011
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