Income Tax Calculator: Comprehensive Guide to Tax Calculation & Optimization
Accurately compute your income tax liability under both old and new regimes. Use our Income Tax Calculator to understand deductions, exemptions, tax slabs, and effective financial planning strategies for optimal savings.
India's Income Tax System
Originating in 1860 under British rule, India's modern tax system is progressive with 7 tax slabs (0% to 30%) and two optional regimes (Old vs. New). For FY 2023-24, a standard deduction of ₹50,000 is available for salaried individuals under both regimes.
Tax Calculation Formula
Taxable Income = Gross Income - (Deductions + Exemptions)
- Old Regime: Permits full deductions (80C, HRA, LTA, etc.)
- New Regime: Offers lower rates but restricts deductions
2023-24 Tax Scenarios
Example 1: Salaried Professional
₹15L annual income with ₹2.5L deductions (Old Regime):
Taxable Income = 15L - 2.5L = 12.5L
Tax = ₹1,12,500 + 20% on the amount above 10L = ₹1,12,500 + (2.5L × 20%) = ₹1,62,500
Example 2: Business Income
With a ₹75L turnover and presumptive taxation:
Taxable Income = 75L × 6% = 4.5L
Tax under New Regime = ₹12,500 + (1.5L × 20%) = ₹42,500
Advanced Tax Strategies
- Optimizing Section 80C investments (ELSS, PPF, NSC)
- Planning for health insurance benefits (Section 80D)
- Maximizing House Rent Allowance (HRA) exemptions
- Capital gains harvesting techniques
Common Filing Errors
- Discrepancies between Form 16 and 26AS
- Incorrect HRA claims without proper documentation
- Overlooking interest income from savings
- Missing advance tax payments