To find out how much tax you have to pay, you need to first calculate total taxable income. Once you know your taxable income, you can easily find out how much tax you have to pay, by applying the applicable tax rates.
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This is how you can calculate your total taxable income:
1. Income from salary
Income from salary can be calculated by adding the basic salary, dearness allowance, house rent allowance, travel allowance, commission, bonus and other allowances. You can compute this income by using the TDS certificate in Form 16.
After adding all these components, you now have your gross salary. From the gross salary, you have to deduct a portion of House Rent Allowance (HRA), travel allowance exemption and medical reimbursement on furnishing medical bills.
2. Income from house property
Another source of taxable income is the rent received from house property. If you have only one house and even if it is self-occupied, you will be required to calculate income from house property. In most of the cases, it will be nil.
If you have rented out your house and receive rent each month, then you can calculate taxable income from house property as follows:
Let's assume Mr Suresh has a property and he earns a rent of Rs 20,000 a month, renting this property. Let's also assume that he has paid Rs 60,000 interest on home loan and Rs 12,000 Municipal taxes for the year.
4. Income from capital gain
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Gross total Income
Gross total income will be sum total of all the five heads of income.
Chapter VI-A Deductions
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