Income tax calculator

The "old" tax regime refers to the existing tax structure where taxpayers can claim various deductions and exemptions under different sections of the Income Tax Act, resulting in lower taxable income and potentially lower tax liability.

On the other hand, the "new" tax regime introduced in Budget 2020 offers lower tax rates but fewer deductions and exemptions, aiming for simplification and reduced compliance burden.

The key difference lies in the choice between availing deductions and exemptions in the old regime or opting for lower tax rates in the new regime, based on individual taxpayer preferences and financial circumstances.

In this calculator gross income is calculated from the below 4 sources.

• Income from Salary: For a salaried person, it is the annual earnings from the employment
• Income from Savings Account: Income from savings accounts typically refers to the interest earned on the funds deposited in a savings account.
• Income from House Property: Income from House Property encompasses all rental income generated from leasing residential or commercial properties.
• Income from Other Sources: Any income that does not fall under the above points will come under Other Sources.

House Rent Allowance (HRA) is an allowance given by employers to cover employees' rental expenses for accommodation, forming a segment of their salary. The exemption for House Rent Allowance (HRA) is computed in accordance with Rule 2A of the Income Tax Rules. As per Rule 2A, the minimum of the following is excluded from the salary under Section 10(13A) and is not considered as taxable income.

The HRA could be calculated using the formula:

Here:

• HRA: Actual HRA received from the employer
• Location Based Allowance: For those living in metro cities: 50% of (Basic salary + Dearness allowance).
• Location Based Allowance: For those living in non-metro cities: 40% of (Basic salary + Dearness allowance).
• Allowance on total rent paid: Actual rent paid minus 10% of (Basic salary + Dearness allowance).

• Section 80C: Individuals as well as Hindu Undivided Family (HUF) members are eligible for tax deductions of up to Rs. 1.5 lakh under Section 80C. Common tax-saving options within this section comprise investments in Public Provident Fund (PPF), life insurance policies, Employee Provident Fund (EPF), repayment of home loans, National Saving Certificates (NSC), and Equity Linked Savings Scheme (ELSS).
• Section 80D:Section 80D of the Income Tax Act allows individuals to claim deductions on premiums paid for health insurance policies for themselves, their spouse, children, and parents, up to specified limits.
• Section 80E:Section 80E of the Income Tax Act allows individuals to claim deductions on the interest paid on education loans for higher studies, including for themselves, their spouse, or their children, with no specified upper limit on the deduction amount.
• Section 80G:Section 80G of the Income Tax Act provides deductions for donations made to specified charitable institutions and funds, subject to certain conditions and limits.
• Section 80TTA/TTB:Section 80TTA and 80TTB of the Income Tax Act provide deductions for interest income earned on savings accounts and certain specified deposits by individuals and senior citizens, respectively.
• Section 80CCD (1B):Section 80CCD (1B) of the Income Tax Act allows individuals to claim an additional deduction of up to Rs. 50,000 for contributions made to the National Pension System (NPS), over and above the deductions available under Section 80C.
• Section 80CCD (2):Section 80CCD (2) of the Income Tax Act allows for an additional deduction on contributions made by an employer to an employee's pension account under the National Pension System (NPS). This deduction is available to employees and is not subject to any monetary limit.
• Section 80CCF:Section 80CCF of the Income Tax Act, which was introduced in the past, provided deductions on investments made in certain specified infrastructure bonds.This section is used to complement the tax benefits offered by Section 80C, and provides additional deductions over and above those listed under Section 80C.