Individuals falling under the taxable income bracket are liable to pay a specific portion of their net annual income as tax. Income tax can be paid either as tax deducted at source while disbursement of monthly salary, or through the income tax returns portal managed by the Central Board of Direct Taxes (CBDT). The provision for online payment of taxes is to ensure individuals pay their stipulated dues on any earnings generated from other sources.
How to Calculate Total Income Tax Liability?
Individuals can determine the total tax expenses through an online income tax calculator. Such tools take into account the following pointers to reflect the actual tax liability of a resident or non-resident Indian at the end of a financial year –
- Annual income from salary/profits.
- Income from other sources such as investments, rental income, etc.
- Tax exemptions applicable, if any.
- House rent and transport allowance.
Entering accurate data regarding the above mentioned pointers will demonstrate the total tax liability of individuals. Minus the taxes already paid through TDS, the remaining can be deposited directly online through the official portal Challan 280. If, in any event, the taxes paid exceed the total liability, the difference is reimbursed by the government within 30 days of filing for the same.
For the assessment year 2019-20, any individual eligible for tax returns or any additional tax payable has to file for the same within 31st March 2020.
Income Tax Slabs
Income tax slabs show the total tax rate payable by individuals, based on their annual earnings from various sources combined. Tax calculator 2020, which helps determine the tax payable by individuals for the year 2019-20, considers tax rates levied as follows –
For individuals, Hindu undivided families (HUFs), and NRIs (for income generated in India) –
|S. No.||Total annual earnings (Rs.)||Tax rate|
|2.||2.5 lakh- 5 lakh||5% of income exceeding Rs. 2.5 lakh|
|3.||5 lakh – 10 lakh||20% of income exceeding Rs. 5 lakh + Rs. 12,500|
|4.||Above 10 lakh||30% of income exceeding Rs. 10 lakh + Rs. 1,12,500|
For senior citizens (above 60 years) –
|S. No.||Total earnings (Rs.)||Tax rate|
|2.||3-5 lakh||5% of income exceeding Rs. 3 lakh|
|3.||5-10 lakh||20% of income exceeding Rs. 5 lakh + Rs. 10,000|
|4.||Above 10 lakh||30% of income exceeding Rs. 10 lakh + Rs. 1,10,000|
For super senior citizens (above 80 years) –
|S. No.||Total earnings (Rs.)||Tax rate|
|2.||5-10 lakh||20% of income exceeding Rs. 5 lakh|
|3.||Above 10 lakh||30% of income exceeding Rs. 10 lakh + Rs. 1 lakh|
These rates are applicable for the assessment year 2020, during which taxes for the year 2019-20 are determined. Additionally, health and education cess at 4% are levied on the total tax rate, above the total amount payable. A surcharge is also applied on total taxable income at the following rates –
- 10% of total income exceeding Rs. 50 lakh, but below Rs. 1 crore.
- 15% of income exceeding Rs. 1 crore.
However, income tax calculator 2020 takes into account the various deductions/exemptions under the Income Tax Act of 1961.
Exemptions on Total Income Tax
- Section 87A – Income below Rs. 5 lakh is eligible for a tax rebate of up to Rs. 12,500.
- Section 80C – Rebate of up to Rs. 1.5 Lakh in any tax-saver fixed deposits, public provident funds, national savings certificate, unit-linked insurance plans, and equity-linked savings schemes on the interest income.
- Section 80CCD (1B) – Tax exemption of up to Rs. 2 lakh for money deposited in the national pension system.
- Section 80D – Up to Rs. 25,000 tax exemption on medical insurance premium bills. The limit rises to Rs. 50,000 for senior citizens.
- Section 80G – Any donations made to charitable organisations is fully exempt from tax calculations.
- Section 80E – Interest on education loan enjoys a 100% tax rebate for up to 8 years.
- Section 80TTA/80TTB – Interest income from savings accounts is eligible for tax waivers up to Rs. 10,000. For senior citizens, all forms of interest income up to Rs. 50,000 are fully waivered from tax calculations, under Section 80TTB.
- Section 80GG – Tax exemption on income spent towards paying house rent (house rent allowance.)
Keeping all such expenditures in mind, individuals can use an online tax calculator available on the official website of Groww.
Steps to Use an Online Income Tax Calculator 2020
Step 1: Go to the official portal of Groww.
Step 2: Go to ‘Calculators’ and click on ‘income tax calculator.’
Step 3: Enter the assessment year (2020-21) and your age.
Step 4: Input total earnings from all sources.
Step 5: Enter exemptions/deductions under Section 87A, 80C, 80CCD (1B), 80D, 80G, 80E, 80TTA, 80TTB, 80GG.
Individuals can go through their TDS certificates to determine the taxes already paid. Employees are often issued Form 16 from their respective employers, showcasing total salary and taxes deducted thereon. However, income accrued from other sources, such as interest income from various investments, rental income if any, royalties, etc. have to be incorporated in the calculation of total tax liability.
Nonetheless, several direct taxation rates are likely to be modified in Union budget 2020, as announced by the central government beforehand. Individuals having an annual income of up to Rs. 5 lakh are expected to enjoy nil tax rates. Those with an annual income ranging from Rs. 5 lakh to Rs. 10 lakh and higher than Rs. 10 lakh might have tax to pay 5% and 20% of their income as taxes, respectively. Furthermore, certain relief on short and long term capital gains on the resale of market-linked securities is likely to take effect post announcement of the Union Budget scheduled on 1st February 2020.