In our previous article we have shared with you the income tax rates for the financial year 2009-10. We have received hundreds of requests from readers to describe the method of income tax calculation in an easier way. We have developed an Income Tax calculator to calculate the tax liability on your own. There are different categories of Individuals for the purpose of calculating Income tax. Income Tax Act has categorized all Income Tax Payers (Individuals) into 3 different types:
Male taxpayers
Female taxpayers
Senior citizens
Annual Income |
Income Tax rates for FY 2009-10 |
Up to 160000 |
Nil |
160000 – 300000 |
10% |
300000 – 500000 |
20% |
500000 and above |
30% |
Now, let us see the method of calculating income tax in detail with few examples:
Example 1: Mr. Rahul is 35 year old and earning 8 lac annually.
Calculation
Heads |
% of Income Tax |
Tax Amount |
Tax on Income up to 160000 |
Nil |
Nil |
Tax on Income between 160000-300000 |
10% |
14000 |
Tax on Income between 300000-500000 |
20% |
40000 |
Tax on Income between 500000- 800000 |
30% |
90000 |
Total |
|
144000 |
Educational Cess |
3% of the total tax |
4320 |
Net Tax Payable |
|
149320 |
Example 2: Mr. Sandeep is 40 year old and earning 12 lac annually.
Calculation:
Heads |
% of Income Tax |
Tax Amount |
Tax on Income up to 160000 |
Nil |
Nil |
Tax on Income between 160000-300000 |
10% |
14000 |
Tax on Income between 300000-500000 |
20% |
40000 |
Tax on Income between 500000- 1200000 |
30% |
210000 |
Total |
|
264000 |
Educational Cess |
3% on the total tax |
7920 |
Net Tax Payable |
|
272920 |
Annual Income |
Income Tax rates for FY 2009-10 |
Up to 190000 |
Nil |
190000 – 300000 |
10% |
300000 – 500000 |
20% |
500000 and above |
30% |
Now, let me explain the method of calculating income tax in detail with few examples:
Example 1: Ms. Shreya is 35 year old and earning 8 lac annually.
Calculation:
Heads |
% of Income Tax |
Tax Amount |
Tax on Income up to 190000 |
Nil |
Nil |
Tax on Income between 190000-300000 |
10% |
11000 |
Tax on Income between 300000-500000 |
20% |
40000 |
Tax on Income between 500000- 800000 |
30% |
90000 |
Total |
|
141000 |
Educational Cess |
3% of the total tax |
4230 |
Net Tax Payable |
|
146230 |
Example 2: Ms.Priya is 40 year old and earning 12 lac annually.
Calculation
Heads |
% of Income Tax |
Tax Amount |
Tax on Income up to 190000 |
Nil |
Nil |
Tax on Income between 190000-300000 |
10% |
11000 |
Tax on Income between 300000-500000 |
20% |
40000 |
Tax on Income between 500000- 1200000 |
30% |
210000 |
Total |
|
262000 |
Educational Cess |
3% on the total tax |
7860 |
Net Tax Payable |
|
269860 |
Annual Income |
Income Tax rates for FY 2009-10 |
Up to 240000 |
Nil |
240000 – 300000 |
10% |
300000 – 500000 |
20% |
500000 and above |
30% |
Now, let us the the method of calculating income tax in detail with few examples:
Example 1: Mr. Ganesh Prasad is 67 year old and earning 8 lac annually.
Calculation:
Heads |
% of Income Tax |
Tax Amount |
Tax on Income up to 240000 |
Nil |
Nil |
Tax on Income between 240000-300000 |
10% |
6000 |
Tax on Income between 300000-500000 |
20% |
40000 |
Tax on Income between 500000- 800000 |
30% |
90000 |
Total |
|
136000 |
Educational Cess |
3% of the total tax |
4080 |
Net Tax Payable |
|
140080 |
Example 2: Ms. Lakshmi 66 year old and earning 12 lac annually.
Calculation:
Heads |
% of Income Tax |
Tax Amount |
Tax on Income up to 240000 |
Nil |
Nil |
Tax on Income between 240000-300000 |
10% |
6000 |
Tax on Income between 300000-500000 |
20% |
40000 |
Tax on Income between 500000- 1200000 |
30% |
210000 |
Total |
|
256000 |
Educational Cess |
3% on the total tax |
7680 |
Net Tax Payable |
|
263680 |
See Also: How do i file income tax returns?
We hope this will help you to understand income tax calculation better. Please click on the below link to access Income Tax Calculator.
Keep your Financial Cognizance up to date with IndianMoney App. Download NOW for simple tips & solutions for your financial wellbeing.
Have a complaint against any company? IndianMoney.com's complaint portal Iamcheated.com can help you resolve the issue. Just visit IamCheated.com and lodge your complaint. If you want to post a review on any company you can post it on Indianmoney.com review and complaint portal IamCheated.com.
Be Wise, Get Rich.
This is to inform that Suvision Holdings Pvt Ltd ("IndianMoney.com") do not charge any fees/security deposit/advances towards outsourcing any of its activities. All stake holders are cautioned against any such fraud.