Income Tax Calculator: You need it more than you know

An income tax calculator is essentially an online tool which that helps you estimate your taxes. This estimation is done based on your income after the Union Budget is presented. In this article, let’s look at how the income tax calculator will help in accordance to the Union Budget 2020-21.

Before we dive into the topic, let us first address the fundamental question here: “How to use the Income tax calculator for FY 2020-21?”

To use the income tax calculator, you need to follow the steps as mentioned below:

Step 1: Select the financial year for which you want your taxes to be calculated.

Step 2: Enter your age accordingly since tax liability in India differs based on different age groups.

Step 3: Hit the ‘Go to Next Step’ or ‘Next’ button.

Step 4: Enter your taxable salary

Note: This amount will be the figure obtained after deducting various exemptions such as HRA, LTA, standard deduction, and so on. Furthermore, this is also a good time to check if fall under any of the tax slabs as specified by the Union Budget.

Step 5: Now, enter other details such as

• Interest income

• Rental income

• Interest paid on a home loan for rented

• Interest paid on loan for self-occupied property

Step 6: Click on ‘Go to Next Step’ or ‘Next’ button.

Step 7: At this step, if you want to calculate your taxes under the old tax slabs then, you will have to ensure that you mention your tax saving investments under section 80C, 80D, 80G, 80E and 80TTA.

Step 8: Last step – click on ‘Calculate.’ Once you do that, you will get your tax liability. Here, you will also be able to compare the pre-budget and post-budget tax liability.

Note: For the fields which are not applicable to you, you can enter “0”.

Many income tax calculators come with an option of giving one copy of your tax liability on your mail. This way, you can keep a record of your tax calculations for future reference.

Why do you need it?

While there are many reasons that the experts will advise you to use an income tax calculator, here are some more:

• It helps you calculator your tax liability at any time, from anywhere.

• Income tax calculators also help you compare your taxes from the previous years.

• It’s an easy and hassle-free way of calculating your tax.

What are the documents which are required when you’re e-filing your income tax returns?

• PAN, Aadhar Card details, and current address for personal details.

• Bank account details held in a financial year.

• Proof of income such as current salary details, income from investments (like FDs, savings bank account) etc.

• Deductions which are claimed under Section 80 or Chapter VI-A.

• Details of all Tax payments such as TDS and advance tax payments.

Along with this, you can also consult an expert to help you understand the nuances of an income tax calculator.