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Calculating Your Income Tax Liability 2008-09

Click here to calculate your income tax for 2009-10

The income tax which is charged to you is based on the tax slabs declared by the Government in its annual budget every year. The following table encapsulates the tax slabs applicable this year. (Financial Year 2008-2009 )

Taxable Income Slab Tax Slab
Upto Rs. 1,50,000
Up to Rs. 1,80,000 (for women)
Up to Rs. 2,25,000 (for residents, 65 years or above)
Nil
Rs. 1,50,000 – Rs. 3,00,000 10%
Rs. 3,00,001 – Rs. 5,00,000 20%
Rs. 5,00,001 – Rs. 10,00,000 30%
Above Rs. 10,00,001 30% + 10% surcharge on tax
Note: In addition, an education cess of 3% is charged on the entire tax amount including surcharge

 

Please note that the taxable income is arrived at after adding all your different sources of income and subtracting the deductions that you have taken advantage of under Section 80.

Lets take a few examples to illustrate how you can calculate taxes based on these slabs.

Example 1:
Sarla is a salaried employee, her annual income is Rs. 2,40,000. She has made no tax savings investments during the year.
Let us calculate her income tax liability.

Heads Amounts
Gross Total Income Rs. 240,000
Deductions Nil
Taxable Income Rs. 240,000
Income Tax Calculations Tax
Tax on Income upto Rs 180,000 0% Zero
Tax on the remaining Rs 60,000 10% Rs.6,000
Total Income Tax Due Rs. 6,000
Educational Cess @ 3% Rs. 180
Total Tax Payable Rs. 6,180

Example 2:
Vinod is a salaried employee. His annual income is Rs. 3,25,000.His home loan interest payment is Rs 1,20,000 and his home loan principal repayment is Rs. 80,000.He has made an investment of Rs. 50,000 in NSC.
Let us calculate Vinod's interest liability.

Heads Amounts
Income from Salary Rs. 325,000
Income from House Property
(Section 24 Deduction for Home loan interest repayment)
Rs.120,000
Gross Total Income Rs. 205,000
Section 80 C Deductions Rs.100,000
NSC Investment Rs. 50,000
Home Loan Principal Repayment Rs.80,000
Total Rs. 130,000
Taxable Income 105,000
Total Tax Due Rs. 0

Example 3:
Ram is a salaried employee who earned Rs.12,00,000. He has bought a health insurance policy for himself worth Rs 10,000. Ram has also bought ELSS funds for Rs. 80,000 and has also paid a LIC premium of Rs. 20,000.He has also donated Rs. 20,000 to the Prime Minister's Relief Fund.
Let us calculate Ram's tax liability.

Heads Amounts
Gross Total Income Rs. 1,200,000
Section 80 C Deductions Rs.100,000
LIC Premium Rs. 20,000
Home Loan Principal Repayment Rs. 80,000
Total Rs. 100,000
Other Donations Rs. 30,000
Section 80D Health Insuance Premium Rs. 10,000
Section 80G Donation To A Charity Rs. 20,000
Total Taxable Income 1,070,000
Income Tax Calculations Tax
Tax on Income upto Rs 150,000 0% Zero
Tax on the next Rs 1,50,000
(Slab 150,001 to 3,00,000)
10% Rs.15,000
Tax on the next Rs 2,00,000
(Slab Rs. 3,00,001 to Rs. 500,000)
20% Rs.40,000
Tax on the Tax on next Rs. 570,000
(above 500,001)
30% Rs. 1,71,000
Income Tax Due Rs. 2,26,000
Surcharge on total tax
(Surcharge is applicable if the taxable income
is above Rs.1,000,000)
10% Rs. 22,600
Income Tax Due Rs. 2,48,600
Educational Cess @ 3% Rs.7,458
Total Tax Payable Rs.2,56,058



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Comments
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Madhuri said :
27/02/2010
Very easy way to understand the tax calculations ......
vishakha said :
22/01/2010
Realyy it's a nice way to understand tax.
shekhar.dalvi said :
01/12/2009
this is very nice explanetion of tax
Rakesh Singh said :
27/11/2009
Thanks for your guide to learners, excellent work done by you people....expalin very clear and easy to understand metarial.
pavithra said :
25/11/2009
iam earning 2, 33,364 per annum ,belong to female category. iam paying 25000/- per year in Birla insurance . want to know how much IT i should pay for the same.
Chrisma said :
25/11/2009
Very simple explanation.Easy to understand.
Sridhar said :
01/11/2009
Thank you very much.. Very clear and useful..
amardeep said :
20/10/2009
It is nicely explained, but if they could have added pf, esi, gratuity, ta, da and other fringe benefit it is fantastic under one roof opportunity to learn everything.
Divya said :
15/10/2009
really good attempt to explain things easily..it would be more useful if other salary components like HRA, LTA etc. are taken into calculations..
Shiv Kumar vishwakarma said :
11/10/2009
Very easy and explainable. Excellent work. Thankyou so much.
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