alexa

Search in Indianmoney's WealthPedia

Home Articles How to Calculate Income Tax?

How to Calculate Income Tax?

IndianMoney.com Research Team | Posted On Monday, December 14,2009, 08:28 PM

How to Calculate Income Tax?

 

 

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 

Income Tax Slab for Male Tax Payers

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

Income Tax Slab for Female Tax Payers

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

Income Tax Slab for Senior Citizens

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.

What is your Credit Score? Get FREE Credit Score in 1 Minute!

Get Start Now!
CIBIL Meter
Get It now!
Attention!

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.