So New Tax Regime does not allow us to reduce our taxable income to save income tax.īut we can claim deductions to save income tax in Old Tax Regime. This introduction to more income tax slabs have helped individuals save a lot of income tax due to reduced Tax Slab Rates.īut there is a condition with New Tax Regime: We cannot claim any Investment options or deductions with New Tax Regime. 10 Lacs, then 30% Tax BracketĪbove procedure is applicable only for Old Tax Regime.īut couple of years ago, a New Tax regime with Reduced Tax Slab rates were introduced due to which we can belong to different Tax Bracket based on our Income.Īnd following is the way to identify the Tax Bracket in New Tax Regime: Previously we used to identify the income tax bracket based on income in following ways: And also we need to choose between Old Tax Regime and New Tax Regime to calculate income tax that we will see later in this article. Since now we have seen the calculation of taxable income using a salary payslip, it is time to identify our Tax Bracket.īased on our income every year, our income tax will be calculated. Here we have not considered salary increments or bonuses which need to be added accordingly in the Taxable Income. 5,82,720 in a financial year if the income and deductions remains same. If you make more investments per month in other Tax Saving Options including PPF, home loan, Insurance premiums, etc, you can calculate your Taxable Income accordingly by reducing those amounts.7950 per month, which can be reduced from monthly taxable income to reach Rs. 10,250, you can claim some amount using HRA calculator here. But if you stay on rent and get HRA = Rs.So if there are no more deductions, your taxable income per month will be Rs.Transport recovery (and Labour welfare) in above case is the type of your expenses and cannot be deducted to save income tax.Provident Fund Contribution need to be removed from Gross Income and mentioned in Section 80C, so your updated Taxable Income becomes Rs.The answer to this question is different for different salaried employees and are as follows: Now, how much of this total income is taxable? Standard Deduction is not applicable in New Tax Regime. 50,000 which will be applicable to only Salaried Employees and Pensioners under Old Tax Regime. We also have to consider Standard Deduction of Rs. In hand Income = Total monthly income – Monthly Deductions So the formula to calculate monthly in hand income is: 58,970 ( Adding all earnings and deductions) Taxable Income Exampleīelow is the screenshot of a salary payslip: Salary Payslip to calculate Income TaxĪs seen in above salary payslip, below are some numbers to focus on: Now since you have understood the definition of Taxable Income, let’s see an example to calculate Taxable Income with a salary payslip example.
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