Filing an income tax return is a very important thing and knowing your taxable amount is equally important. In order to file your income tax return you first need to collect all the information required filing it and an important step is to compute your total taxable income. Let’s go through the details to calculate your taxable income.
The total income of a person has been categorized into 5 heads of income:
- Income from salaries
- Income from house property
- Profit and gains of business or profession
- Capital gains
- Income from other sources
Here’s the procedure to calculate the taxable income on salary:
For computing Total income from various sources, the incomes are classified into:
- Salaries
- Income or loss from property
- Profit and gain from business
- Income from capital gains
- Income from other sources
Gross Total Income= A+B+C+D+E
Total Taxable Income= Gross Total Income- Deductions allowed from income
Total Tax Payable= Tax on Total Income- Rebates and relief allowed under Income Tax Act
The entire taxable income is then divided into the following 4 parts and now you can calculate your taxable income by going through them:
- For an individual who is less than 60 years of age; total taxable income:
- Up to Rs.2.5 Lakhs: No Tax is charged.
- Rs.2.5- Rs.5 Lakhs: 10% of the amount exceeding Rs.2.5 Lakhs is charged.
- Rs.5 – Rs.10 Lakhs: Rs.25,000 + 20% of the amount exceeding Rs.5 Lakhs is charged.
- Above Rs.10 Lakhs: Rs.1,25,000 + 30% of the amount exceeding Rs.10 Lakhs is charged.
- For an individual above 60 years but less than 80 years; total taxable income:
- Up to Rs.3 Lakhs: Tax is not levied.
- Rs.3 – Rs.5 Lakhs: 10% of the amount exceeding Rs.3 Lakhs is charged.
- Rs.5 – Rs.10 Lakhs: Rs.20,000 + 20% of the amount exceeding Rs.5 Lakhs is charged.
- Above Rs.10 Lakhs: Rs.1,20,000 + 30% of the amount exceeding Rs.10 Lakhs is charged.
- For individual above 80 years of age; the taxable income:
- No tax is charged for taxable income up to Rs.5 Lakhs.
- Rs.5 – Rs.10 Lakhs: 20% of the amount exceeding Rs.5 Lakhs is charged.
- Above Rs.10 Lakhs: Rs.1,00,000 + 30% of the amount exceeding Rs.10 Lakhs is charged.
Additionally, you are also charged a surcharge as well as a 2% education cess is charged on the total tax and surcharge amount.
