The Income Tax department on Monday released a ‘tax calculator’ which aims to help a taxpayer decide if the new income tax regime announced in the Budget 2023 is good for him/her or if the old one is better.
“Tax Calculator is now live! A dedicated tax calculator to check Old Tax Regime vis-à-vis New Tax Regime for Individual/HUF/AOP/BOI/Artificial Juridical Person(AJP) as per Section 115 BAC can now be accessed on the IT Dept website,” a tweet by the tax department said.
Why paying income tax important?
Paying income tax is a legal requirement in most countries including in India. Income tax is a way to contribute to society and help fund public services such as schools, hospitals, roads, and other infrastructure. Paying your share of tax ensures that these services are available to everyone.
What is an online income tax calculator?
An income-tax calculator is an online tool that helps to evaluate taxes based on a person’s income. Individuals falling under the taxable income bracket are liable to pay a specific portion of their net annual income as tax.
Calculating your income tax helps you budget your finances. Knowing how much tax you need to pay allows you to plan your expenses and save money accordingly. This helps you avoid overspending and falling into debt.
Calculating income tax also allows you to claim tax deductions for certain expenses.
As per the Budget 2023 announcement, taxpayers opting for the new regime will get a rebate if their income does not exceed Rs 7 lakh per annum.
The finance minister also allowed a standard deduction of Rs 50,000 under the new regime which is already available in the old tax regime. The basic exemption limit has been raised to Rs 3 lakh from Rs 2.5 lakh. A Rs 2.5 lakh basic exemption limit is prescribed in the old tax regime.
The move will lead to a saving of Rs 33,800 for those earning up to Rs 7 lakh annually and opting for the new tax regime. Those with income up to Rs 10 lakh would save Rs 23,400 and Rs 49,400 savings would accrue to those earning up to Rs 15 lakh.
How to calculate income tax from IT department’s tax calculator?
The tax calculator is live on the income tax department’s portal.
Tax Calculator: Old Regime Vis-a-vis New Regime: When one logs into the IT department portal, it asks the following information;
-Tax Payer Type
-Male / Female / Senior Citizen / Super Senior Citizen
-Income other than Salary and Special Rate Income
-Interest on Self Occupied House Property
-Deductions allowed under both regimes i.e. 80CCH(2), 80CCD(2), 80JJAA, family pension deduction under section 57(iia)
-Deductions/exemptions (other than mentioned above) not eligible in new tax regime
As soon as you enter the above details, the portal will represent the number under old and new tax regimes.
The department has also underlined the disclaimer saying that the calculator is only to enable the public to have a quick and an easy access to basic tax calculation and does not purport to give correct tax calculation in all circumstances. It is advised that for filing of returns the exact calculation may be made as per the provisions contained in the relevant Acts, Rules etc..
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