What is a tax calculator for income?

You may easily compute tax on your taxable income using an online income tax calculator, which is a tool that is readily available.

You may quickly organize and compile your financial statement for the current fiscal year using an income tax calculator while taking actions to maximize your tax savings. In addition, income tax calculators are very convenient to utilize when determining your net taxable income because they are available online (after deducting various investments and expenses).

Let’s examine how to use the online tax calculator to compute income tax.

How to Use the Online Income Tax Calculator for the Fiscal Years 2021–2022 and 2022–2023?

The income tax calculator is an intuitive online tool that, once you enter the essential information, estimates your taxable income and the amount of tax due.

The tool’s usage instructions are as follows:

  • Select your age range. Your applicable tax slab rates are determined by this.
  • Type in your yearly salary. The entire pay, including any bonuses and variable components, may be included.
  • After entering this information, more areas appear where you can enter your investment information.
  • Enter the amount of your investment under Sections 80C and 80CCD (1B)
  • If you have a health insurance policy, enter your medical insurance premium under Section 80D.
  • Enter your HRA received and rent paid if you rent your home. Here is a calculator for HRA exemption.
  • Enter the interest paid on any house loans you have since this can be deducted from your taxable income.
  • Enter the interest paid on any student loans you are repaying, as this can be deducted from your taxable income.

Note: You can enter 0 in any fields that are not applicable.

On the Summary tab, you can view your taxable income and the tax due.

What advantages come with utilizing a tax calculator?

An effective tool for determining your tax burden is an income tax calculator, which takes into account crucial information, including income, expenses, and investments. The following are some benefits of using a tax calculator:

  • Simpler tax planning: 

The Union Budget 2020 revealed two tax regimes—the old and the new, the latter of which includes significant modifications. The tax regime that the taxpayer chooses to use is their choice. A 2020 income tax calculator can help you determine which tax system is appropriate for you, estimate your liability, and determine any tax deductions that may apply.

  • Simple and powerful 

You can be sure of your tax liability calculation’s accuracy, given the current tax rules, by using an online tax calculator. In addition, online tax calculators reduce mistakes.

  • Saving time: 

Tax planning is difficult, time-consuming, and frequently stressful. In addition, the adoption of the new tax system and the changing legal climate make manual tax estimation a little scary as well. However, using these simple and user-friendly tools will save you a ton of time compared to manually estimating taxes.

  • Cost-effectiveness: 

Online calculators are more affordable than professional chartered accountants because they are free to use. If you’re not confident in handling things yourself, it would be better to engage an accountant so as to reduce mistakes.

  • Accuracy

There is always a chance that the computations will contain errors and defects. However, for the purpose of filing your taxes, the income tax preparation software will guarantee that the results are correct and reliable. The best part is that you can click a button and instantly receive exact results in any form you need. These computations are also employed when filing returns electronically.