The new tax regime is applicable from 2023 and offers the chance to shift from the old system. But since you might be familiar with the deductions and benefits of the old regime, the new taxation method feels like an unexplored area. But there is a solution. Using an income tax calculator new regime tax rates and deductions can become clearer.
The calculator is a great way to ascertain which tax regime is more suitable. But how to get started with the calculations?
With all the new avenues and deductions, it can be challenging to calculate your income tax under the new regime. What an income tax calculator does is it simplifies the process for you. It estimates the taxes you owe based on inputs like your annual salary and profits from other avenues like shares or real estate sales. Best of all, it’s free to use!
A tax calculator new regime is also valuable for exploring investment opportunities. Several calculators provide you with investment options after accounting for your tax liabilities for a given financial year.
Here are some of the inputs required by an income tax calculator:
In accordance with the new regime, you might also be asked for more inputs to calculate your tax liabilities accurately.
The new regime has provided relief from taxes to individuals earning up to INR 3 lakhs per annum. So, when you opt for the new tax regime, you are liable to pay taxes only if you earn more than INR 3 lakhs per annum.
After you have confirmed your annual salary, follow these steps to calculate your tax liabilities:
Gross income refers to the total earnings during a specific time period, excluding taxes and other liabilities. It counts the sum from your salary from your job, freelance work, and the capital gains from avenues like shares, mutual funds or property sales.
While the new tax regime has reduced the number of deductions, it still offers benefits of up to INR 50,000 for taxpayers. Some of the available deductions are as follows:
Subtracting the deductions from the gross total income will provide your net total income. This is the amount from which you can calculate your tax liabilities. You can also use the new tax regime calculator to know all the relevant deductions.
Use your net total income to check and confirm the relevant tax slab. The new tax regime comprises six income brackets, with the percentage of taxable income differing in each. If you have already paid taxes in the form of TDS, or self-assessment tax, deduct this amount from the net payable amount.
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You can calculate your take-home salary by deducting income tax, PF contribution and professional tax from the gross income.
If you earn less than INR 3 lakhs per annum, you are not required to pay taxes under the new regime. Otherwise, here are the avenues: