Tax Calculator - Gross Taxable Income, Income Tax Slabs, Exclusions, and Deductions

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All About Tax Calculator - Step by Step Calculation of Your Income Tax

All individuals and entities in India, having a taxable income, are required to pay taxes to the Income Tax Department and file their income tax returns. If you are an individual looking for financial savings, then opting for a health insurance policy is a wise idea. Getting a tax deduction under section 80dof the Income Tax Act, 1961, is one of the advantages of buying a health insurance policy.

The amount of tax is paid depending on the current income tax slab under which the person falls. One can estimate the tax to be paid through manual calculation or by using an income tax calculator which is an online tool.

Here is a complete guide to the Income Tax Calculator and the tax benefits you can avail under your health mediclaim policy.

What are the Various Income Tax Slabs?

As per the Union Budget 2019, the income tax slab and rates applicable for tax-paying persons including individuals, Body of Individuals, Hindu Undivided Family (HUF) and Association of People are given below:

For Resident Individuals whose Age is Below 60 Years

Income Range

Tax rates

Up to Rs 2.5 Lakh

Nil

Rs 2,50,001 to Rs 5,00,000

5% of total income which exceeds Rs 2,50,001

Rs 5,00,001 to Rs 10,00,000

Rs 12,500 + 20% of total income which exceeds Rs 5,00,000

Rs 10,00,001 and above

Rs 1,12,500 + 30% of total income which exceeds Rs 10,00,000

For Resident Individuals whose Age is Between 60 to 80 Years

Income Range

Tax rates

Up to Rs 5 Lakh

Nil

Rs 5,00,001 to Rs 10,00,000

20% of total income which exceeds Rs 5,00,000

Rs 10,00,001 and above

Rs 1,10,000 + 30% of total income which exceeds Rs 10,00,000

Note: In addition to the tax amount given above, a cess of 4% is also applicable.

How to Calculate the Gross Taxable Income?

If you are a resident Indian or an NRI, you are required to pay taxes if your income falls within the taxable range. The income can be obtained from various sources as mentioned below:

  • Income from salary: If you are a salaried individual, your salary structure includes Basic Pay, House Rent Allowance (HRA), Transport Allowance, Leave Travel Allowance (LTA), Special Allowance, Other Allowance, reimbursement of phone bills, etc. However, you are entitled to tax exemptions in some cases like HRA and LTA. In addition, a standard deduction of Rs 50,000 is applicable.
  • Income from Residential Property: The annual value of the property you own, besides self-occupied property is chargeable to tax. That is, the rent received from your properties is taxable. However, you can claim deductions up to 30% of the annual value or rent obtained, as per section 24 of the I-T act.
  • Income from Profits and Gains of Business or Profession: The ‘profits and gains’ of business or profession undertaken by the assessee, at any time, during the previous year are chargeable to tax.
  • Income on Capital Gains: Profit obtained from transfer or sale of any capital asset (property, securities, etc.) is chargeable to tax. The income thus earned is classified into two categories - Short Term Capital Gain and Long Term Capital Gain – depending on the tenure during which the capital asset is held.
  • Income from other sources: The various income sources which are not categorized under other heads viz. income from salary are classified under income from other sources. For instance, interest earned on securities, income from lottery, family pension, etc.

Thus, ‘gross total income’ is the amount obtained by adding up all the income earned under the heads of income as specified above.

What is Excluded from Gross Total Income?

According to Section 10 of the Income Tax Act, there are certain income types which are not counted under Gross Total Income and thus are tax exempted.

Few of them are given below:

  • Income earned from agriculture
  • Income received as a HUF member
  • Profit earned as a co-owner in a partnership firm
  • Amount obtained from Provident Fund Account or ‘Sukanya Samruddhi’ Account
  • Amount obtained in the form of death-cum-retirement gratuity under the revised Pension Rules of the Central Government
  • Amount received on voluntary retirement or termination of service, as per any voluntary retirement scheme, up to max. Rs 5 lakh.
  • Amount obtained in the form of gratuity received under Payment of Gratuity Act if it does not exceed the amount calculated as per the provisions of sub-sections (2) and (3) of section 4 of that Act
  • Sum received as an employee from the National Pension Scheme (NPS) Trust on account closure/opting out of the scheme, provided the sum does not exceed 40% of the total sum payable to the person at the time of closure/ opting out of the scheme. 

Deductions Applicable on Gross Taxable Income

  • Section 80C Deductions: A maximum deduction of Rs. 1,50,000 can be claimed for any contribution made by the income tax assessed towards:
    • Payment of Life Insurance policy premiums
    • Repayment of the principal portion of home loan
    • Payment of Stamp duty or property registration fees
    • Public Provident fund(PPF), Sukanya Samriddhi Yojana, Equity Linked Saving Scheme (ELSS), Five Year Bank Deposit (FD), Senior Citizens Saving Scheme, National Savings Certificate
  • Section 80D Deductions: Individuals and HUFs who pay for the premiums towards their respective mediclaim policies are eligible for tax rebate under Section 80D. The maximum deduction applicable for an individual and his family on the health insurance policy is Rs 25,000. If the plan includes senior citizens or the assessee is above 60 years of age, then the maximum deduction is Rs. 30,000.
  • Section 80DD Deductions: The expenses incurred by individuals and HUFs on medical treatment or maintenance of a person with a disability are applicable for tax deduction up to the maximum amount of Rs 75,000.
  • Section 80DDB Deductions: The expenses incurred on medical treatment for specific diseases for self or dependent are applicable for tax deduction up to a maximum amount of Rs 40,000. The limit is Rs 80,000 for senior citizens.
  • Section 80G Deductions: There is a tax deduction of 100% for contributions made towards charitable institutions specified under the I-T Act, for instance, Prime Minister National Relief Fund or National Defense Fund. In other cases, there is a deduction of 50%. 
  • Section 80TTA Deductions: There is a deduction of Rs 10,000 on saving interest income. 

Thus, the Net Taxable Income = (Gross Total Income – Deductions)

>> Click to Calculate Health Insurance Premium now!

Example:

Rahul is a salaried person who works in an MNC in Gurgaon, India. His salary structure for the financial year 2019-2020 is as mentioned below:

Components

Salary per Month

Salary per Annum

Deductions

Taxable

Basic Salary

Rs 40,000

Rs 4,80,000

-

Rs 4,80,000

HRA

Rs 15,000

Rs 1,80,000

Rs 1,32,000

Rs 48,000

Special Allowance

Rs 11,000

Rs 1,32,000

Rs 1,32,000

LTA

-

Rs 20,000

Rs 10000

Rs 10000

Standard Deduction

-

-

Rs 50,000

-

Deductions

Rahul lives in Delhi and pays a monthly rent of Rs 15,000. He also claimed LTA of Rs 10,000.

The HRA exemption he will get is the amount which is the least among the following:

  1. HRA amount received from an employer in a year = Rs 1,80,000
  2. Actual rent paid in a year – 10% of basic = Rs 1,80,000 – Rs 48,000 = Rs 1,32,000
  3. 50% of the basic salary if he lives in metro city = Rs 2,40,000

Total salary = Rs 8, 12,000 per annum

Gross taxable income from salary = Rs 6, 20,000 per annum

Investments

Rahul has invested his money as specified below:

Category

Investments

Amount

Deductions claimed

Section 80D

Premium paid for mediclaim policy

Rs 12,000

Rs 12,000

Section 80C

Premium paid for LIC policy

Rs 8,000

Rs 1,40,600

PPF

Rs 60,000

ELSS

Rs 15,000

EPF contribution deducted by the employer

(Rs 40,000 * 12%) * 12 = 57,600

Section 80TTA

Interest from the savings account

Rs 8,500

Rs 8,500

Now, Let’s Calculate his Taxable Income:

Gross Taxable Income in India

Nature of income

Amount

Total

Salary

Rs 6,20,000

Income from Other Sources

Rs 8,500

Gross Total Income = Rs 6,28,500

Deductions

80C

Rs 1,40,600

80D

Rs 12,000

80TTA

Rs 8,500

Gross Taxable Income = Gross Total Income –Deductions

Rs 4,67,400

How to Calculate Income Tax?

Since Rahul is below 60 years of age, the following income tax slab is applicable for calculation of his income tax.

Income Range

Tax rates

Up to Rs 2.5 Lakh

Nil

0

Rs 2,50,001 to Rs 5,00,000

5% of (Rs 4,67,400 less Rs 2,50,000)

Rs 10,870

Rs 5,00,001 to Rs 10,00,000

Rs 12,500 + 20% of total income which exceeds Rs 5,00,000

0

Rs 10,00,001 and above

Rs 1,12,500 + 30% of total income which exceeds Rs 10,00,000

0

Cess = 4% of Rs 10,870 = Rs 434.8

Total Income Tax = Rs 10,870 + Rs 434.8 = Rs 11,304.8

Thus, the total tax amount payable by Rahul for the financial year 2019-2020 is Rs 11,304.8. He must file his tax returns for the assessment year 2020-21.