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Income Tax: To save income tax, it is important to know how much tax you owe to the Income Tax Department. Then you can choose the right tax saving option according to you. We are telling you the step-by-step process to calculate income tax according to your salary. By following this you can easily calculate tax. Then you will be able to plan your tax savings accordingly.
1: Find the gross salary
To know your income tax liability, it is important to know your gross salary. This will include your basic salary, allowances, bonuses and other taxable income.
2. Recognize discounts
After this, identify the tax exemption available. Income tax exemption is available on some part of your salary. These exemptions may include House Rent Allowance (HRA), Leave Travel Allowance (LTA) and Standard Deduction. Subtract these exemptions from your salary to find your taxable salary.
3. Calculate Deductions
Find the deductions available under various sections of the Income Tax Act, such as Section 80C (for investments in provident fund, PPF, or life insurance), Section 80D (for health insurance premiums) and Section 24B (for home loan interest) . Subtract these deductions from your after-tax paycheck to determine your taxable income. After calculating exemptions and deductions you will know your taxable income.
4. Slabs and discounts
Calculate tax for each slab based on your taxable income. After this calculate the tax liability. After this calculate the tax exemption you will get. The income after exemption received will be taxable. You will have to pay tax on this.
Tax calculation facility from Income Tax Department also
You can also calculate the tax according to your salary with the help of tax calculator from the Income Tax Department website. By clicking on the link given below, you will directly reach the Income Tax Department website. There you will be able to calculate tax with the help of tax calculator.