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Simple Guide to Calculate Income Tax for Salaried Individuals
Income tax slab rate applicable for the fiscal year 2020-21 are as mentioned under:
- Up to 2.5 lakhs - No tax
- Rs.2.5 lakhs to 5 lakhs - 5 per cent
- Rs.5 lakhs to 10 lakhs - 20 per cent
- Above Rs.10 lakhs - 30 per cent
You can invest under the Section 80C to a maximum of Rs.1,50,000. Or if you are in a higher tax bracket, you can save Rs.45,000 in tax. Alternately, investment in Provident Fund, Life Insurance Premium, Equity Linked Savings Scheme, Home Loan monthly installment, National Savings Certificate, Infrastructure Bond, Pension Funds, Tuition fees and Unit Linked Insurance Plan can be made. You must note that gross salary is the sum total of Basic pay + Dearness allowance + House Rent Allowance + transport allowance + special allowance + other allowance. The total taxable income is calculated after applicable deductions such as HRA, LTA etc are adjusted from the total income which comprises of gross salary and income from other sources. Then the income tax is calculated according to the slab under which the taxable income falls under +3% cess.
Once you have computed the tax payable, you need to note your tax liability. For this follow the mentioned steps:
- Your total income needs to be rounded off to the closest multiple of 10.
- Classify the total amount into four parts: long-term capital gains, short-term capital gains and the total amount that remains (that is ultimately rounded off).
- Add up the computed tax.
- Whatever the balance is, levy the surcharges.
- Add education, secondary and higher education cess to the total calculated tax (including surcharges).
- Check the rebates that are allowed after surcharges are added.
- The remaining balance will be your total payable tax which is then rounded off to the closest multiple of 10.
HDFC Life offers Save Tax Calculator, an online tool for calculating the amount of tax payable by you by taking into consideration various parameters like income, investments, gender, age etc. For checking, click on the mentioned link and follow the steps listed: Income Tax Calculator
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Francis Rodrigues
Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.
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HDFC Life
Reviewed by Life Insurance Experts
HDFC LIFE IS A TRUSTED LIFE INSURANCE PARTNER
We at HDFC Life are committed to offer innovative products and services that enable individuals live a ‘Life of Pride’. For over two decades we have been providing life insurance solutions - protection, pension, savings, investment, annuity and health.
HDFC Life Insurance Company Limited. CIN: L65110MH2000PLC128245, IRDAI Reg. No. 101.
Registered Office: Lodha Excelus, 13th Floor, Apollo Mills Compound, N.M. Joshi Marg, Mahalaxmi, Mumbai 400 011. Email: Buyonline@hdfclife.in, Tel No: 1800-266-9777 (10 am to 7 pm). The name/letters “HDFC” in the name/logo of the company belongs to Housing Development Finance Corporation Limited (“HDFC Limited”) and is used by HDFC Life under an agreement entered into with HDFC Limited.
For more details on risk factors, associated terms and conditions and exclusions please read sales brochure carefully before concluding a sale.
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