The year 2019 has seen the central government present the Union Budget twice. Both budgets had some income tax-related announcements that can impact your finances.
A lot of the announcements made by interim finance minister Piyush Goyal in February have come into effect, while the budget proposals announced by finance minister Nirmala Sitharaman are yet to come into effect as these are yet to be passed by the Parliament.
To fully understand the impact of the Union Budget on your taxes, you must be able to calculate your Income Tax without error. This is where the income tax calculator comes in handy.
The income tax calculator is an easy-to-use online tool that helps you estimate your taxes based on your income after the Union Budget is presented. The income tax payable depends upon the tax slab applicable to your income.
Individuals whose taxable income does not exceed Rs 5 lakh for the FY 2019-20 will continue to avail the tax-rebate and thereby will pay zero tax.
At present, the government divides the income tax slabs and exemption limits based on the age and city of residence. Gross taxable income, HRA (house rent allowance) exemption, and transport allowance are the three major components taken into consideration while calculating the income tax.
Some components of your salary are exempt from tax, such as telephone bills reimbursement, leave travel allowance. On top of these exemptions, a standard deduction of Rs 40,000 was introduced in budget 2018. This has been increased to Rs 50,000 in budget 2019.
So how does the income tax calculator work?
1. Choose the financial year for which you want your taxes to be calculated.
2. Select your age accordingly. Tax liability in India differs based on the age groups.
3. Enter your taxable salary i.e. salary after deducting various exemptions such as HRA, LTA, the standard deduction and so on.
4. Along with taxable salary, you must enter other details such as interest income, rental income, interest paid on home loan for rented, and interest paid on loan for a self-occupied property.
5. You will have to enter your tax-saving investments under section 80C, 80D, 80G, 80E, and 80TTA.
6. You can then click on ‘Calculate’ to get your tax liability. Whichever field is not applicable, you can enter “0”.
For the financial year 2019-20, no changes in the income tax slabs and rates were announced in July’s Budget 2019. Due to the newly introduced surcharge, those with incomes between Rs 2 crore and 5 crore will effectively have to pay 39 percent as tax and those with income more than Rs 5 crore will have to pay more than 42 percent.
Also, under the newly introduced section 80EEA, a deduction of up to Rs 1.5 lakh is proposed on home loan interest payments. This tax benefit can be availed if the assessee does not own any residential house property on the date of sanction of loan, the loan should be sanctioned in FY 2019-20, and registration cost of the house should not be more than Rs 45 lakh, etc.
In the 2019-2020 Union Budget also announced the introduction of pre-filled Income Tax Returns (ITR) for ease and better compliance.
So, the next you use the income tax calculator, take note of the changing government norms about your income tax.