Precisely calculating taxes according to the latest tax regime is an absolute necessity for accurately filing taxes. But it’s hard to make correct estimations with constantly changing regulations and deductions. That’s why many people run to tax consultants to avoid any mistakes in tax filing.  However, this doesn’t seem to be an economical option, as the fees of a classified tax consultant can take a toll on your budget.  

That’s when an income tax calculator emerges as a more convenient, affordable, and reliable option for determining tax obligations. The income tax calculator is an online IT calculating tool that enables registered and unregistered e-filing users to accurately estimate their taxes according to the updated provisions of the Income Tax Act. Read here to get a descriptive analysis of income tax calculators and learn the basics of using income tax calculators.  

How to Use an Income Tax Calculator to Calculate Taxes? 

Are you struggling with the correct method of using an IT calculator? Fret not; using an income tax calculator isn’t rocket science. Follow the steps mentioned below to estimate your tax liabilities correctly. 

  • Navigate to any Income tax calculator and enter the financial year for which you are required to calculate taxes. As of now, it will be 2024-2025.  
  • Then, select your age slab. Remember that taxes vary depending on your age slab. So, carefully choose your age slab and hit the Next option. 
  • Specify your gross income from salary, rental income, business profits, capital gains, and other sources.  
  • After that, enter the tax-saving investment details that will help you claim deductions under Sections 80C, 80D, and 80TTA of the Income Tax Act, 1961. 
  • Lastly, tap on the calculate option, and the calculator will make all your tax calculations in no time.  

The Income Tax Act of 1961 categorised gross income into five main categories. For accurate tax analysis, it’s important to know what type of income and earnings fall under these five segments.  Move to the subsequent section for a more comprehensive analysis of different categories of gross income.  

Detailed Overview of Classification of Gross Income 

Calculating gross income can be a little complicated as total income is classified into five main categories. Let’s take a quick sneak peek at these income classifications! 

  • Income from salary—This includes the monthly income that you receive from your employer. It includes a basic salary, house rent allowance, gratuity, travel allowance, dearness allowance, and several other allowances. You can check your salary slip to get detailed information about your allowances.  
  • Income from house or rental property – In this category, you’ll include all the earnings that you receive through renting out a residential or commercial property.  
  • Income from business or profession – Here, you’ll need to mention all the profits and income that you generate through business or practising any profession. Similar to salary and rental income, this is also a taxable income.  
  • Income from capital gains – Under this category, you’ll mention any revenue or profit made through selling or transferring capital assets like mutual funds, real estate, stocks, etc. Depending on the duration of investment, the Income Tax Act categorises capital gains into Short Term Capital Gains (STCG) and Long Term Capital Gains (LTCG). 
  • Income from other sources – Here, you can include any income that doesn’t come under any of the categories above. It generally provides bank interest, lotteries, gifts, etc. Income from other sources also falls under tax obligation; however, in the case of gifts, you’ll need only to pay tax if you receive more than 50,00 per annum as a present. 

Your income consists of all five income segments together. The IT calculator will carefully analyse your gross income to estimate the tax liability and tax deductions for which you are eligible. 

Plan Your Financial Year with ACKO 

With Income tax calculators, the daunting task of tax filing feels like a breeze. To avoid errors and discrepancies, we suggest you go for a reliable tool like ACKO that can provide you with a more comprehensive understanding of tax liabilities with 100% accuracy.  

ACKO Tax calculator is equipped with cutting-edge features, an updated tax regime, and valuable insights, which makes it an indispensable part of your financial toolkit. So, better not waste your time. Start your financial planning with the ACKO income tax calculator today to optimise your tax savings.