Calculating income tax can be complicated given the frequent changes that occur in tax laws. Consequently, taking care of tax rebates, tax exemptions, applicable laws, etc., without any help, can become challenging. The union budget has also gotten people confused with multiple choices of tax regime. Therefore, you need to assess both old and new regimes properly before choosing one. You can do it with the help of an income tax calculator available online. This tool can easily estimate taxes applicable to your income and help you make better financial choices.
Apart from income tax, other financial tools are also available to help you do tedious calculations easily and make better investment choices. Such as, you can use a PPF calculator to estimate the interests and returns on your investments in just a few quick steps. Please keep reading to learn more about why you should use an income tax calculator, benefits and the steps to use it.
What is an Income Tax Calculator?
An income tax calculation tool is a simple online tool using which you can estimate your tax liabilities based on the tax laws applicable in a specific year. To carry out the calculations, you need basic information like the total yearly salary, interest paid on loans, rent paid, tuition fees, investments made etc. Once you enter all the required details, the calculator automatically assesses your tax liabilities.
Using income tax calculators, you can do accurate and quick calculations and assess the tax applicable based on your income. You can prepare and organize your financial statements for the financial year and take steps to maximize your savings.
Also Read: Income Tax: Meaning, Importance, Pros, How to Pay Income Tax
Benefits of using the Income Tax Calculator
1. Makes Tax Planning Simple
With two new tax regimes announced by Union Budget 2020, it has become a tedious job for taxpayers to choose one of the two. With the help of a tax calculator, you can determine which regime suits you and calculate the tax liabilities to get tax deductions.
2. Cost-Effective Method
Online tax calculators are available free of cost. As compared to professional charted accountants, these tools are more cost-effective.
3. Saves Time
Tax planning is time-consuming, stressful and complicated. Manual estimations take a lot of energy and time. They can be even more exhausting with an introduction to new tax regimes and constantly changing tax laws. Using a tax calculator, you can avoid all the hassle of manual calculations and estimate the liable tax amounts by entering a few details in seconds.
4. Simple and Effective Calculations
Based on the present tax laws, you can be sure of your tax liabilities by calculating them in advance. Also, these are authentic automated tools, so there is minimal possibility of errors and accurate results. All these financial tools like tax calculator, PPF calculator, FD calculator, you can accurate results every time.
How to Use Income Tax Calculator?
- Open the tax calculator that you want to use online.
- Choose the financial year you need to calculate the taxes. For example, 2021-2022.
- Select your age if you are a senior citizen (above 60 years), super senior citizen (80 years and above) or a regular individual (0-60 years) and then click on the “Next” button.
- Next, you have to enter your gross income from salary, interest from interest, income from other sources, and income from rent and click the Next button.
- To claim deductions under various guidelines, enter the tax-saving investment details. Once you have entered the entire tax-savings investment amount, click on Next.
- The tax calculator will do all the required calculations based on old and new regimes once you have added all the details.
Whether choosing the right tax-saving investment plans or calculating tax liabilities, you can use income tax calculator available online and calculate the tax applicable to your income quickly, accurately and effectively. It also offers other financial tools like PPF calculator, FD return calculator and many others to provide all-rounding financial solutions.
With the union budget, implementing new and old regimes has created a lot of confusion among taxpayers. So, it would be best if you calculated your tax liabilities from both regimes and then picked the most profitable one. An income tax calculator is the best solution to calculate the payable tax amounts per your income by providing some basic details. Apart from the income tax, you can determine returns from your investments using the PPF calculator and other financial tools available online, so save your money and be worry-free in financial terms.
