Calculating Your Income Tax Liability 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 2009-2010)

Taxable Income Slab	Tax Slab
Upto Rs. 1,60,000 Up to Rs. 1,90,000 (for women) Up to Rs. 2,40,000 (for residents, 65 years or above)	Nil
Rs. 1,60,001 - Rs. 3,00,000	10%
Rs. 3,00,001 - Rs. 5,00,000	20%
Rs. 5,00,001 and above	30%
Note: In addition, an education cess of 3% is charged on the entire tax amount. Surcharge of 10% on income above 10 Lakhs have been scraped.

 

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 80C to 80U.

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 1,90,000		0%	Zero
Tax on the remaining Rs 50,000		10%	Rs.5,000
Total Income Tax Due			Rs.5,000
Educational Cess @ 3%			Rs. 150
Total Tax Payable			Rs. 5,150

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
Less: 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			Rs. 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
Less: Section 80 C Deductions			Rs.100,000
LIC Premium		Rs. 20,000
ELSS Funds		Rs. 80,000
Total		Rs. 100,000
Less: Other Deductions			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 1,60,000		0%	Zero
Tax on the next Rs 1,40,000 (Slab 160,001 to 3,00,000)		10%	Rs.14,000
Tax on the next Rs 2,00,000 (Slab Rs. 3,00,001 to Rs. 500,000)		20%	Rs.40,000
Tax on next Rs. 570,000 (above 500,001)		30%	Rs. 1,71,000
Income Tax Due			Rs. 2,25,000
Surcharge on total tax (No Surcharge is payable from previous year 2009-10 onwards)		0.00%	Rs. Nil
Income Tax Due			Rs. 2,25,000
Educational Cess @ 3%			Rs.6,750
Total Tax Payable			Rs.2,31,750

Please use our simple tax calculator to calculate your taxes in 2 minutes.

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ashish kumar said : 01/04/2011	simple and nice examples to understand taxation method clearly.
Vikass Srivastava said : 11/03/2011	Very Good Example it give us to how we calculate
ganesh  said : 16/02/2011	very good example of calculating income. it gives us a basic idea
puja sane said : 15/01/2011	i wanted info for my tybcom exams. it is explained so will that even a person like me who does not hav any knowledge about tax can read n get info.
Megha Telang said : 12/08/2010	Excellent examples and explained very well. pls. add more examples using complex data.
Ashwini said : 06/08/2010	Extremely good examples. I need to know about education allow. (exemptions, under which section etc..)
Raju said : 28/07/2010	Very good examples. Pls add example with 80GG (house rent paid) calculations. Also show the slab limit of similar to 100,000 shown for 80C.
Sowmya said : 23/07/2010	Extremely good and useful. I knew the basics but the examples helped really clear it up! Thanks.
Nilesh said : 02/07/2010	hi. i have a pan card. as i am a student. i dont have any earning source. do i need to pay the income tax? or is there any formality which should be followed???
lg said : 23/06/2010	explained in the simple and easy method.very helpful. thanks.
sandip malakar said : 15/06/2010	excellent example. Very well explained. extremelly helpful. thanks a lot
Manjusha said : 01/06/2010	Thanks for giving valuable information. The online tax calculator is very helpful to know the tax details.
muralib said : 15/05/2010	how to calculate 80D,80C,80G
S.Ramprasad said : 11/05/2010	Thanks for providing easy step for tax evaluation
Navtej said : 01/05/2010	Great Work....Thanks for make it so simple
Ram said : 30/04/2010	Examples are too good
senthil said : 17/04/2010	I need to know about the Current Financial Year TDS process (Tax Deduction Statement)
Rocky said : 17/04/2010	Extremely well defined, no excuse at all
Guru said : 30/03/2010	Examples are So nice
RAJEEV said : 23/03/2010	THANX BUDY.......PLZ SEND SOME EXAMPLES WITH ALL ALLOWENCES AND OTHER SOURCES OF INCOME
Rajesh Murthy said : 22/03/2010	Hey Good examples You should have given some more examples with regard to HRA and other which is useful for Proffessionals.
Ravi Yadav said : 16/03/2010	Good work, thanks
SANDIP said : 16/03/2010	thanx for your valuable tip. its help me very much.
v.t.swarup said : 10/03/2010	requires more examples with tax exemption in different it sections for right choosing for an individual. thanks.,
Masthan Shaik said : 09/03/2010	Super and Explained well with examples
AVIRAL GUPTA said : 09/03/2010	REALLY NICE WAY TO EXPLAIN THNX
vikas said : 08/03/2010	super and excellent example.
shobha said : 05/03/2010	excellent.. it is very easy to understand
Shraddha said : 04/03/2010	Very nice!!!! Thanks
Mohammad Afraz uddin said : 04/03/2010	Good example to understand
Naseer said : 01/03/2010	Fantastic keep it up. It is for aam adami to understand other wise all punter are very well know all this. Good bhai Good.
abhimanyu said : 27/02/2010	Best Example
Ashwini Joshi said : 26/02/2010	Good as well as simplified examples...which a common man can easily understand.Thanks
vivek said : 24/02/2010	thank u very much dear maja aa gaya ish calculation ko samajhkar ab koi tension nahi insurence policy sale karne me.by have a nice day
Julu said : 24/02/2010	Hi All my income come from my salary and my tax calculation is done by my Company Accountant. While computing the tax we saw the 1 lac is considered as 0 tax but in your example it is 1 lac and 60 thousand. Can you please put more light on this. And if company provides us shares in discount then how this impacts the tax calculation.
Tushar Pandya said : 22/02/2010	Good Examples. Thanks!
Arun Sharma said : 22/02/2010	Nice clearification,easy to understand
prakash raj said : 21/02/2010	good examples easy to understand..... thanks
Pranay Shrivastava said : 20/02/2010	I am shocked to see the calculation its strange very nice good very good.
satyanarayana reddy said : 18/02/2010	nice example and easy to understand...
Pooja said : 16/02/2010	Examples are really very good
ran said : 16/02/2010	excellent example
Ujwal said : 13/02/2010	Thanks
Nag said : 13/02/2010	Thank You
Dhirendra  said : 08/02/2010	It's very easy to understand and its also help to determine how much tax we are paying right now. Thanks
amit kumar said : 08/02/2010	its very easy to understand.thanks
padmaja.s said : 08/02/2010	its very useful. easy to understand
radhey said : 05/02/2010	It was very helpful
Mrs. Shivangi Kulkarni said : 03/02/2010	very great examples for calculating IT
Nitin Bhardwaj said : 02/02/2010	Really appreciate the way of describing the tax calculation.
spvmanian said : 01/02/2010	The way you explained, Beautiful.... thanks in thousands... :) venkat
Surekha said : 01/02/2010	Too good and easy way to explain. Keep it up!
Bharti  said : 31/01/2010	Thanks a ton....the Tax calculation has been expained...very simply
Harish said : 28/01/2010	Great!! easy to understand the calculation of tax
srinivas said : 27/01/2010	Superb ..Sir...
krishna sudha said : 23/01/2010	that was some calculation great job !!!!
suma said : 23/01/2010	Great explanation
Sathia said : 21/01/2010	Its been really long time I wanted to know about TAX calcuation, the page has provided good example to explain...Thanks..
Naresh A N said : 21/01/2010	Initially i really don't have any idea about taxation, now It's pretty easy to understand.
Chethan said : 15/01/2010	Hey Man,it is simply a great work indeed.All the best,do keep posting on this topic if you find anything new.
Simon said : 12/01/2010	Hey Thanks man... that was a clear and good example... very much self explanatory ...thanks again
sanjay said : 07/01/2010	in which section we can consider the stamp Duty amount, which we can paid at the time of purchasing
sandeep singh said : 18/12/2009	thanks for above examples they are very clear now i calculate my Income tax
Yogesh said : 17/12/2009	Very clear and nice comment.I hvnt read before very clear picture of tax return.Thx a lot.
IMRAN said : 16/12/2009	I heard about 80D is directly deductable from Tax
Hemraj said : 01/12/2009	Above examples are very clear and helpful. They cover good knowledge. Now I can calculation tax on any income. Regards, Hemraj
Yogita Hande said : 29/10/2009	Sir, Can you pls. explain me that, Suppose Our profit will be above 15lac then why we deducted Rs.5lac in calculation of Income Tax
Yogesh said : 09/08/2009	Sir Pls explain some example in which HRA is included ... so We get to know about the tax saving Section 10(13A)