Calculate Taxable Income

Calculate Your Taxable Income

As per the provisions of the income tax Act there are five heads of Income. Following are as below—

• Salary

• House Property

• Business & Profession

• Capital Gains

• Other Sources

Steps in calculating tax—

• Classify the receipts into one of the five sources.

• Collect information on all the receipts both cash and other source of income. (income from lottery)

• Deduct exemptions allowed from each source of income. (Medical allowance exempt up to Rs 15000/-)

• Add taxable portion of income from all sources.

• Calculate tax based on the prevailing rates and also depending on weather male below 65, female below 65 or a senior citizen.

• If the income is above Rs 1000000/- add surcharge @ 10%.

• Calculate education cess @ 3% on the tax payable including surcharge.

Tax slab for Man (2009-2010)

From	To	%
0	160000/-	0%
160001	300000/-	10%
300001	500000/-	20%
500001	Above	30%

Tax slab for Women (2009-2010)

From	To	%
0	190000/-	0%
145001	300000/-	10%
300001	500000/-	20%
500001	Above	30%

Tax slab for Senior Citizen (2009-2010)

From	To	%
0	240000/-	0%
240001	300000/-	10%
300001	500000/-	20%
500001	Above	30%

Tax Savings under Sec 80 C

• Premium paid towards life insurance.

• Equity linked savings scheme of mutual fund.

• National savings scheme.

• Tuition free paid on children’s education up to two children.

• Public provident fund.

• Bank fixed deposits with a tenure of 5 years or more.

• Principal on housing loan.

• Recognized superannuation fund.

• Specified infrastructure bond.

Tax Savings under Sec 80 CCE

• In this section the maximum allowable deductions for investments made under section 80C and 80CCC (pension) taken together is Rs 100000/-.

• Maximum deduction for 80C + 80CCC is Rs 100000/- with no internal break up limit.

Tax Savings under Sec 10 (10D)

• Proceeds from an insurance policy including the gain made are tax free provided that sum assured is at least 5 times of premium.

• In case this condition is violated then the entire proceeds becomes taxable as income from other sources. Proceeds form a key man insurance policy is taxable.

For Example

Particular	Amount
Basic	150000/-
Transportation Allowance	15000/-
Medical Allowance	20000/-
Special Allowance	300000/-
Personal Pay	300000/-
Incentives	450000/-
Total	1215000/

Solution

Particular	Amount	Amount
Basic is fully taxable		150000/-
Personal pay is fully taxable		300000/-
Special Allowance is fully taxable		300000/-
Incentives is fully taxable		450000/-
Medical Allowance (less exempt amount Rs 15000/- u/s 80D)	20000/- -15000/-	5000/-
Transportation Allowance (less max exempt amount Rs 9600/-)	15000/- -9600/-	5400/-
Total Taxable Amount		1210400/

Calculate total tax

Slab	Income in the slab	Rate	Tax
0 to 110000/-	110000/-	0%	0/-
110001/- to 150000/-	40000/-	10%	4000/-
150001/- to 250000/-	100000/-	20%	20000/-
Above 250001/-	960400/-	30%	288120/-
Total			312120/-
Add Surcharge @ 10% on 312120/-			31212/-
Total			343332/-
Add Education cess @ 3%			10300/-
Total Tax			353632/

Note

• Maximum exempt amount is Rs 15000/- for medical allowance under section 80D but you need to furnishes all medical bills.

• Maximum exempt amount is Rs 9600/- for transportation allowance.

• Surcharge @ 10% incase of total income is more than 10 lakh per annum.

• Education cess @ 3%.

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