Income Tax Calculation for FY 2009-10

Income Tax Calculation

To calculate the tax to paid for a Financial year, the steps included are :
1)    Add all the incomes from different sources to find the Total income.
2)    Subtract the annual professional tax from the total income to get the Gross Taxable income.
3)    Identify all the eligible income tax deductions and sum them up.
4)    Subtract all the deductions from the Gross Total Income to get the Net Taxable Income.
5)    Determine the slab of tax depending upon the net taxable income.
6)    Calculate the tax based on the slab.
7)    Add 3% Educational Cess to the total tax to get the Net Tax to be paid.

Lets take a few examples to elaborate on how to calculate tax depending upon the income, investments and expenditures.

Example 1:
Vijay is a salaried person with total yearly income of Rs2,40,000. His employer deducted Rs 200 per month as Professional tax. He made no other investments.
Lets calculate Vijay’s Tax Liability :

So from the above calculation the tax to be paid by Vijay is Rs 7993.

Example 2 :
Ramesh is salaried employee and his annual income is Rs 3,50,000. His employer deducted Rs 200 per month towards Professional tax. He made a repayment of Rs 80,000 as principle and Rs 1,20,000 towards interest for a home loan. He also made a investment of Rs 60,000 towards NSC.

Lets calculate Ramesh’s tax:

 So from the above calculation the tax to be paid by Ramesh is NIL.
Example 3:
Mahi is a salaried employee and her annual income is Rs 5,00,000 where her employer deducted Rs 2400 as annual professional tax. She had also rented out her flat and received a rent of Rs 30,000 annually. She paid a Health Insurance premium of Rs 5,000 and donated Rs 20,000 towards Prime Minister Relief fund. She made investments of Rs 50,000 in bank fixed deposits of tenure more than 5 yrs and paid a LIC premium of Rs 20,000.
 

So from the above calculation the tax to be paid by Mahi is Rs 38522.

Example 4 :

Suren is a salaried employee and his annual income is Rs 15,00,000 where his employer deducted Rs 2400 as annual professional tax. He paid principle of Rs 1,00,000 and interest of Rs 2,00,000 for home loan.. He paid LIC of Rs 20,000 and mediclaim of Rs 10,000. He also contributed Rs 25,000 to Prime Minister charity fund.

So from the above calculation the tax to be paid by Suren is Rs 303395.

There are a number of online calculators available in internet.

• To calculate the total tax on your net income refer to the official site of Income Tax.
• If you have different sources of income and various deductions then download the tax calculator and fill in the details in the spreadsheet to calculate the exact tax payable.

• To know the Income tax Slabs for Assessment year 2010-2011,click here.
• To know the various Deduction for Income Tax computation for Assessment year 2010-2011, click here.