How to calculate taxable income

Cal­cu­lat­ing the tax­able income will show the tax lia­bil­ity of an indi­vid­ual. In order to cal­cu­late tax­able income, you should first cal­cu­late gross total income. Find out all the pos­si­ble deduc­tions avail­able. Cal­cu­late tax­able income by deduct­ing deduc­tions from gross total income.

Cal­cu­late tax­able income — Cal­cu­la­tion of Gross Total Income

Check the var­i­ous heads of income and ascer­tain your income in the finan­cial year. Add all the types of income to reach Gross Total Income.

Cal­cu­late tax­able income — Deductions

Cal­cu­late the total deduc­tions for the finan­cial year. It includes –

a) Life Insur­ance Pre­mi­ums
b) Employee’s Prov­i­dent Fund (EPF)
c) Pub­lic Prov­i­dent Fund (PPF)
d) Equity Linked Tax Sav­ing scheme
e) Tuition fees
f) Dona­tions
g) Med­ical Insur­ance Pre­mi­ums
h) Other deduc­tions
i) Infra­struc­ture bonds ( Limit of Indian rupees 20,000)

Cal­cu­la­tion of Tax­able Income

Total Tax­able Income = Gross Total Income — Deductions

You have to pay tax on the tax­able income only. This is only the tax cal­cu­la­tion on salary income. If you have any other income apart from salary that will be taxed differently.

Related posts:

1. 8 easy steps to file income tax return
2. Sec­tion 80C of Income Tax
3. Income Tax terms
4. Sec­tion 10(13A) : House Rent Allowance
5. How to cal­cu­late home loan eligibility