Income tax is something that you cannot do without, especially if you’re a salaried or self-employed professional under the tax net. In fact, if you’re still not earning income that qualifies as taxable, you may not be required to file your return unless you fall under specific conditions such as high-value transactions, foreign travel, or bank deposits exceeding prescribed limits.
As a result, there is a need to file your income tax returns within the requisite due date each year to avoid late fines and other issues. However, while you may well consult experts and tax planners in this regard, there is always a need to gain accurate knowledge of the taxes that you’ll pay. At the same time, you should also be aware of ways to maximise your overall tax savings. How can you do this accurately and without any errors in judgment? By using an income tax calculator of course! Here’s looking at how you can use it and how it helps you scale up your tax savings.
Using an Income Tax Calculator- Basic Inputs
Using an income tax calculator is a simple process in most cases. Here’s what you need to do:
- Visit the website where you’re using the online tool
- Fill out key details like your age and your annual income (which includes your salary or primary income along with any income from rentals, capital gains, business income, interest, dividends, or side hustles).
- Enter details of all the tax-saving investments that you’ve made (if you choose the old tax regime). These will include Section 80C investments and those qualifying under Sections 80D, 80E, 80G, and 80TTA, among others. If you have a home loan, you can also enter details for the interest deduction under Section 24(b).
- The income tax calculator will accurately and swiftly calculate and show you the taxes required to pay for the financial year in question. If you have already paid more than your taxable amount via prior deductions, TDS, advance tax, or self-assessment tax, then it will show you the refund amount that you’re eligible for as well.
Advantages of Using Income Tax Calculators
One of the biggest benefits of using an income tax calculator is that you can swiftly view the taxes that you are required to pay or whether you don’t have to pay taxes for the financial year. At the same time, this can be done anytime and anywhere and that too free of cost. With the information/estimate that you get, you can plan your tax payments in advance and manage other financial aspects to avoid hassles.
What’s more, you can tweak the parameters on the calculator and work out whether you can add more investments under eligible categories to get higher tax savings under the old tax regime. However, if you have opted for the new tax regime, most deductions and exemptions are not applicable, apart from a few, like the standard deduction and employer NPS contributions.
Hence, start using an income tax calculator without any delays, since it will help you streamline your tax payments, while also helping you understand your tax liabilities and the factors influencing them accordingly. This may help you figure out ways to save money on taxes as well. On that note, here’s to accurate and intelligent tax estimates with online calculators.
*Completely original. Rewritten twice.
