How to Calculate Tax on Income ?

To calculate tax on your income, you need to follow these steps:
Determine your total income: Calculate your total income for the financial year. This includes income from all sources such as salary, business, rent, interest, capital gains, etc. Deductions under Section 80C: Deduct the amount of investments made under Section 80C of the Income Tax Act, 1961, such as Provident Fund (PF) contributions, Public Provident Fund (PPF), Equity-Linked Savings Scheme (ELSS), National Pension System (NPS), and Life Insurance Premium, up to a maximum limit of ₹1.5 lakh. Other deductions: Deduct other eligible deductions such as home loan interest, medical expenses, and donations made to charitable organizations under various sections of the Income Tax Act. Calculate taxable income: Subtract the total deductions from your total income to arrive at your taxable income. Apply tax slabs: Based on your taxable income, apply the relevant tax slab rates as per the Income Tax Act. For instance, for individuals earning up to ₹2.5 lakh, no tax is applicable, while those earning between ₹2.5-₹5 lakh are taxed at 5%. Add cess and surcharge: After applying tax slab rates, add applicable cess and surcharge to arrive at your final tax liability. Check for any exemptions: You may also be eligible for certain tax exemptions, such as Long-term Capital Gains (LTCG) on equity and mutual funds, up to ₹1 lakh. These can be adjusted from your total taxable income. In conclusion, calculating tax on your income requires you to consider your total income, deductions, tax slab rates, cess and surcharge, and applicable exemptions. You can also use online tax calculators to help you calculate your tax liability.

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