Income Tax Calculator

How to Calculate Income Tax FY 2022-23  

To understand your potential tax liability, you first need to figure out your tax slab. People have to pay taxes based on their annual taxable income. By dividing individuals under income tax slabs, the Government ensures that people do not pay very heavy taxes. Currently, there are two tax regimes available in India, each with different taxations for each slab. Let’s take a look at what they are:

Income Tax Slab for New & Old Regime

Income Tax Slab for Old Regime (FY 2022 – 2023)
For Individuals Below the age of 60 years

Annual Income	Rate of Tax
Up to INR 2,50,000 per year	None
INR 2,50,001 to INR 5,00,000 per year	5% on the amount above INR 2,50,000 (with a full rebate under Section 87A) + 4% cess on income tax
INR 5,00,001 to INR 10,00,000 per year	INR 12,500 + 20% on the income over INR 5,00,000 + 4% cess on income tax
INR 10,00,001 or more per year	INR 1,12,500 + 30% on the income over INR 10,00,000 + 4% cess on income tax

For Individuals Between the age of 60 and 80 years (Senior Citizens)

Annual Income	Rate of Tax
Up to INR 3,00,000 per year	None
INR 3,00,001 to INR 5,00,000 per year	5% on the amount above INR 3,00,000 (With a full rebate under Section 87A)+ 4% cess on income tax
INR 5,00,001 to INR 10,00,000 per year	INR 10,000 + 20% on the income over INR 5,00,000 + 4% cess on income tax
INR 10,00,001 or more per year	INR 1,10,000 + 30% on the income over INR 10,00,000 + 4% cess on income tax

For Individuals Above the age of 80 years (Super Senior Citizens)

Annual Income	Rate of Tax
Up to INR 5,00,000 per year	None
INR 5,00,001 to INR 10,00,000 per year	20% on the amount above INR 5,00,000 + 4% cess on income tax
INR 10,00,001 or more per year	INR 1,00,000 + 30% on the income over INR 10,00,000 + 4% cess on income tax

Income Tax Slab for New Regime (FY 2022 – 2023)  

Annual Income	Rate of Tax
Up to INR 2,50,000 per year	None
Between INR 2,50,001 and INR 5,00,000 per year	5% on the amount above INR 2,50,000 (with a total rebate under Section 87A) + 4% cess on income tax
Between INR 5,00,001 and INR 7,50,000 per year	INR 12,500 + 10% on the income over INR 5,00,000 + 4% cess on income tax
Between INR 7,50,001 and INR 10,00,000 per year	INR 37,500 + 15% on the income over INR 7,50,000 + 4% cess on income tax
Between INR 10,00,001 and INR 12,50,000 per year	INR 75,000 + 20% on the income over INR 10,00,000 + 4% cess on income tax
Between INR 12,50,001 and INR 15,00,000 per year	INR 1,25,000 + 25% on the income over INR 12,50,000 + 4% cess on income tax
INR 15,00,001 or more per year	INR 1,87,500 + 30% on the income over INR 15,00,000 + 4% cess on income tax

Surcharge (applicable for Old & New Tax Regime):

Surcharge is levied over and above the tax subject to marginal relief at following rates if total income exceeds specified limits:

Total Income	Rate of surcharge*
Exceeding INR 50 lakhs but not exceeding INR 1 Cr.	10%
Exceeding INR 1 Cr. but not exceeding INR 2 Cr.	15%
Exceeding INR 2 Cr. but not exceeding INR 5 Cr.	25%
Exceeding INR 5 Cr.	37%

*In case where total income includes any income by way of dividend and capital gains chargeable under section 111A and section 112A of Income Tax Act, the rate of surcharge on the amount of income tax computed in respect of that part of income is restricted to 15%.

Health and education cess at 4% is to be applied on amount of surcharge also.

Once you understand your tax slab based on your income, age and eligible tax deductions, you can use the figures given above to calculate your tax. Let’s assume a 50-year-old man earns INR 9,60,000 per year. He invests in the PPF and purchased life insurance for himself with a premium of INR 2,55,000. Since he falls under the old tax regime, he first needs to calculate his taxable income. After making the eligible deductions, his taxable income works out to INR 8,10,000. Based on his age and taxable income, he needs to pay INR 12,500 + 20% of (8,10,000 – 5,00,000) as income tax. The amount works out to INR 74,500 plus Health and Education cess of INR 2,980 (74,500*4%)

Let’s assume the man did not make any investments or deductions. His taxable income would be the entire INR 9,60,000. As per the income tax slabs in the new regime, he would have to pay INR 37,500 + 15% of (9,60,000 – 7,50,000). In this scenario, the income tax amount works out to INR 69,000 plus Health and Education cess of INR 2,760

Calculate Income Tax for the Old Regime

Under the old tax regime, individuals can claim eligible deductions as per the provisions outlined in Section 80C of the Income Tax Act^#. So, money they invest for their future in funds such as the NPS or PPF can get deducted from their taxable income. Before calculating their income tax liability, these individuals must calculate their taxable income. Once they make the deductions, they arrive at the taxable income amount. Based on their age and their taxable income, they can understand which tax bracket they fall under and pay the requisite taxes accordingly.

Calculate Income Tax for the New Regime

The new tax regime does not allow any deductions. It’s helpful for individuals who have not made too many investments, since the tax amount is lower. Here, individuals do not have to work out their taxable income. They simply need to understand which tax bracket they fall under and they can calculate their tax liability with ease.

Income Tax Calculation

We can understand how to calculate an individual’s income tax liability by using an example. Amit, a 45-year-old, earns INR 12,00,000 per year. As per his income break-up, he gets HRA of INR 45,000 per month even though he pays monthly rent of INR 60,000. Additionally, he purchased a life insurance policy for himself, with a premium of INR 3,00,000. He also pays the premiums for health insurance plans for himself and his mother, who is 70. Let’s take a look at how Amit should calculate his income:

So, Amit’s total taxable income works out to INR 8,80,000.

His income tax liability is INR 12,500 + 20% of the taxable income above INR 5,00,000
= INR 12,500 + 20% (8,80,000 – 5,00,000)
= INR 12,500 + 20% of 3,80,000
= INR 12,500 + 76,000
=INR 88,500+ INR 3,540 (88,500*4%)

So, the total tax Amit has to pay works out to INR 92,040.

Now, let’s take a look at Varun’s situation. Varun earns INR 12,00,000 per year. He does not make any investments, so he follows the new tax regime. He forgoes the standard deduction and his HRA deduction. His taxable income is INR 7,50,000.

As per the new tax regime, his income tax liability is INR 75,000 + 20% of the income above INR 10,00,000

= INR 75,000 + 20% (12,00,000 – 10,00,000)
= INR 75,000 + 20% of 2,00,000
= INR 75,000 + 40,000
=INR 1,15,000 + INR 4,600 (1,15,000* 4%)

So, the total tax Varun has to pay works out to INR 1,19,600.