Income Tax calculator: How to find your taxable income?

Income Tax calculator: The last date to file income tax returns is not so far and most salaried people would have started making calls to their financial advisors for the same. Whether you are working for a company or run a business, you have file income return and pay tax. The amount you end up paying depends on income, its sources, age, exemptions & investments. And, to find your taxable income, you need to understand all of this. 

Taxable income for salaried class 

If you are salaried class, then your salary is likely to be divided into several parts - Basic Salary, Dearness Allowance (DA), Annuity & Gratuity benefits received in that financial year, Allowances on transport, medical expenses etc. In addition this, you could be earning through investments like FDs, mutual funds etc. There could be additional income from house property which includes any rental income that an individual earns as rent from a residential or commercial property.

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Note that all the above components put together constitute your Gross Income. However, know that Gross income is not your taxable income. Once you have computed your gross income, the next step is to know all the tax exemptions available for you. 

Tax Benefits on Income 

A standard exemption of Rs 50,000 is available to all individuals irrespective of their income. You can avail benefit on rent paid under section 10. HRA exemption for salaried individual is the minimum of the actual HRA received from employer or 50% of the basic salary & dearness allowance for individuals living in metro cities, 40% of the same for individuals living in non-metro cities or Actual rent paid less 10% of basic salary & dearness allowance.  

The biggest source of tax saving is Section 80C which allows you to save Rs 1.5 lakh every year by investing in ELSS Mutual Funds, Tax saving Fixed Deposits, Term Life Insurance Premium, Pension Schemes, Provident Fund etc. Then, there are other sections like 80 CCD, 80 E etc, that allow you to save more.  

How to find taxable income 

You need to subtract the investments and other benefits from your gross income to find the actual taxable income. Income taxpayers (both salaried & self-employed) have been categorized into three age groups and the tax slabs are different for the three categories.