When learning to calculate the tax on earnings, one should always
start with the basics such as different tax-brackets, permitted relaxation, e
filing process, getting refund, etc.
The investments you make actually make a significant
difference when computing the final amount. So, one should also learn about the
common types of deductions in taxation.
Do check our income tax calculator which will automatically compute the
final figure after reducing the applicable deductions when you submit the necessary
data in the form shown to you.
You can find more
information on such interesting
topics here.
It is a popular myth that different rates are applied
directly to the total amount. This is not
the case though.
For example, if
you are less than 60 years old and earning Rs 14 lakh annually, then you won’t
be charged 30%, i.e. Rs 420000, directly on your total salary.
However, this will be calculated as below:
First, if you are eligible for any deductions, your taxable
earnings will be evaluated.
Let’s say, your taxable amount comes out to be Rs 13,00,000.
Now, total value will arrive in stages.
For the amount between Rs 250000 and Rs 500000, i.e. Rs
250000, you will be charged at 5%.
This comes out to be Rs 12500.
For the amount between Rs 500000 and Rs 1000000, i.e. Rs
500000, you will be charged at 20%.
This comes out to be Rs 100000.
For the amount between Rs 1000000 and Rs 1300000, i.e. Rs
300000, you will be charged at 30%.
And, this comes out to be Rs 90000.
So, the total value charged =
Rs 12500 + 100000 + 90000
=
Rs 2,02,500
In the same way, you can work with the other slabs as well.
You don’t have to be a
math genius to do your taxes! You can easily hire an expert. We, at AllIndiaITR, guarantee you the best rates in the market for highly professional
financial services like income tax efiling, income tax return, NRI plan, income
tax refund, etc.
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