Income Tax Calculation

Here I will show you how to calculate how much you have to pay Income Tax for a financial year if you have your Form 16 and if you know what is the Income Tax Rate. You need to know also what are the investment areas where you can save Income Tax. Of course there is a limit on investments. For example, the limit of investments is Rs. 1.5 lakh in 80C sections (it includes 80CCC and 80CCD sections).

Now when you get Form 16 from Organization, you see the Part A contains tax deductions on a quarterly and monthly basis and deposited to the Tax Department. So go to Part B where you see all your total gross salary, investment details and deductions.

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Form 16

We do service in private sectors, public sectors or Government sectors and for this we earn money & draw salary on a monthly basis. So it is our duty to pay income tax based on our annual income. Government has already defined tax rates slab based on income and this rate is revised from time to time in an financial year. Therefore while an Organization deducts a roughly calculated tax on a monthly basis from our salary, the final tax is calculated on a financial year from April to next year March months. At the end of the each current financial year everyone has to file an Income Tax(IT) where a Form 16 comes into the picture. A Form 16 draws every detail of your salary, investments and deductions so that it is transparent to you.

You can check also Different sections in Income Tax and Income tax slab rates

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Income Tax Slab Rates

It is our duty to pay tax when our annual income exceeds a certain amount of rupees. The income tax rates are usually revised every year during the budget.
In order to provide relief to individual taxpayers and to stimulate consumption and encourage savings and keeping in view the lower inflation rate, various deductions that are allowed to a taxpayer under Section 80C, 80CCC and 80CCD. You may be interested to read also Different sections in Income Tax

Following is the table of the income tax provisions proposed by Finance Minister for the financial year 2015-16 in the Budget(Assessment Year) 2016-17: Continue reading “Income Tax Slab Rates”