How to use the income tax department's tax calculator for calculating your taxes?

Filing income tax returns can be a daunting task, especially if you are doing it for the first time. Moreover, choosing between the old and new regime can make the process even more complicated. To ease the process of filing taxes, the income tax department has launched an income tax calculator that can help taxpayers calculate their total tax liability and choose the IT regime that is right for them.

The income tax calculator allows taxpayers to submit the required information related to their salary and deductions, and compare their total tax liability under both regimes. The old tax regime provides several deductions and exemptions while calculating the tax liability, while the new regime, introduced in the Union Budget 2020-21, offers concessional rates. However, if you opt for the new tax regime, you will have to forgo certain exemptions and deductions available in the old tax regime.

Calculating your income tax can help you keep your finances in check. Knowing how much tax you need to pay can give you a clear image to sort out your expenses and savings. Taxpayers who opt for the new regime will receive a rebate if their income falls under the Rs 7 lakh bracket. As per the Budget 2023 announcement, this will include a Rs 50,000 standard deduction that was also part of the old tax regime. Additionally, the basic exemption amount was increased from Rs 2.5 lakh to Rs 3 lakh under the old tax regime.

Using the income tax calculator is easy. It is available on the tax department’s official website, and taxpayers need to submit information such as their taxpayer type, gender, residential status, income other than salary, and special rate income. The calculator will also ask for information on deductions allowed under both regimes and income from self-occupied property. Taxpayers should note that the IT department has given a disclaimer regarding the accuracy of the calculator, and they should always make exact calculations as per the provisions contained in the relevant Acts, Rules, etc., when filing their returns.