Method for Calculate Income Tax Using Slab Rates (Income Tax)

 Steps to Calculate Income Tax Using Slab Rates

Determine Gross Income: Calculate your total income from all sources, including salary, house property, capital gains, business/profession, and other sources.

Identify Exemptions: Subtract any exemptions you are eligible for, such as House Rent Allowance (HRA), Leave Travel Allowance (LTA), and standard deduction.

Calculate Deductions: Subtract any deductions you are eligible for under sections like 80C, 80D, 80G, etc.

Compute Net Taxable Income: Subtract the exemptions and deductions from your gross income to get your net taxable income.

Apply Tax Slabs: Apply the appropriate tax rates based on your net taxable income.

Example Calculation

Let's assume your gross income is ₹10,00,000 for the financial year 2024-25.

Gross Income: ₹10,00,000

Exemptions: ₹1,50,000 (Standard Deduction + HRA + LTA)

Deductions: ₹1,00,000 (Section 80C + 80D + 80G)

Net Taxable Income: ₹10,00,000 - ₹1,50,000 - ₹1,00,000 = ₹7,50,000

Applying Tax Slabs:

₹0 - ₹3,00,000: 0% tax

₹3,00,001 - ₹7,00,000: 5% tax

₹7,00,001 - ₹10,00,000: 20% tax

Tax on ₹3,00,000: ₹0

Tax on ₹4,00,000 (₹7,00,000 - ₹3,00,000): 5% of ₹4,00,000 = ₹20,000

Tax on ₹50,000: 20% of ₹50,000 = ₹10000

Total Tax Payable: ₹20,000 + ₹10,000 = ₹30,000

Add Cess: Assuming a cess of 4%, the total tax payable would be ₹30,000 + 4% of ₹30,000 = ₹30,000 + ₹12,00 = ₹31,200

So, your total income tax liability would be ₹31,200.

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