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  • How tax to be paid is calculated in india ?

    Wondering how income tax is calculated in India? Looking out for infromation online? Find responses from our experts on this page which will help yuo to understand tax calculations.

    How tax to be paid is calculated in india? If for example 20 lakhs is in my bank account and I dont have a job, then how much should I pay? Since no income is generated and amount is not withdrawn for many years. If suppose I get 30000 per month, how much tax should I pay? What is the term slab in paying tax?
  • Answers

    7 Answers found.
  • Though Govt is determined to simplify the Income Tax calculations and the process involved in its payment but still it is quite complicated but we can go through some basics of it to understand the fundamental principals about it. Before going in that one thing that is to be understood clearly is that there are many deductions and exemptions and limits prescribed which are to be availed by the tax payer while calculating his Income Tax. Nowadays one can easily find ones Income Tax by going to the Income Tax site and registering there using the PAN and Aadhar card and then entering one's earnings there. Some of the earnings like Bank fixed deposit interest etc will automatically come there and one has to enter only those things which are not automatically present there. Govt is slowly linking every agency with their Income Tax site and many more earnings will come there automatically.

    Govt has announced new rates for Income Tax without any exemption and deduction applicable from the financial year 2020-21. But one is having an option for filling his return even under old regime with deductions and exemptions also if that is beneficial to him. So one has to calculate under both the regimes before submitting the return.

    Anyway, before going to the Income Tax site and paying our taxes let us see how to calculate it. First jot down all your earnings from various sources like salary, interest from bank accounts whether it is Savings Bank or Fixed Deposit, rent from the house if you have given your house on rent, any annuity being received from LIC, interest on Post Office schemes, any online income, any profit by selling shares or bonds etc. In old regime, on earnings there is a standard deduction of Rs 50000 which is to be deducted before arriving at the taxable income. In new regime this exemption is not there. In old regime, there is a maximum deduction of Rs 150000 allowed if invested in certain schemes like PPF, Insurance, ELSS, Tax saving FD etc but that is not available in new regime.

    Let us now come to your case where you have a deposit of Rs 20 lakh in bank and you are getting interest about Rs 30000 per month which means that your total annual interest earning is Rs 360000 only. You have no other income. Bank will be deducting 10% TDS (tax deducted at source) and would be depositing in Income Tax department and that will be visible to you when you go to Income Tax website. It would be about Rs 36000 only. So, that money is now lying with the Income Tax department.

    Now, time is approaching for filing the IT return for the financial year 2020-21 and the last date will be July 2021. If you have some savings made during the year 2020-21 in PPF, Insurance, ELSS, Tax saving FD etc then that can be deducted from your income if you are calculating for the taxable income under old regime. Now let us see what is your taxable income as per old regime calculations -
    Interest income - Rs 360000
    Standard deduction - Rs 50000
    So, Taxable income is Rs 310000
    As per the existing slab if the taxable income is above Rs 250000 then tax is to be paid. So you have to pay tax on Rs 310000 - 250000 = Rs 60000 which at 5% slab tax rate comes to Rs 3000. But Income Tax department had already collected from you through TDS an amount of Rs 36000 so you file a return and they will refund you the amount Rs 36000 - 3000 = Rs 33000 to your bank account as mentioned by you in your return.

    You can file the return in the new regime option also and then the standard deduction would not be available. The basic slab is Rs 250000 only and your taxable income would be Rs 360000 but when it is less than Rs 500000 then as per the new regime rules tax is deemed to be zero. So your Income Tax is nil. But what about the Rs 36000 which is lying in Income Tax department? So, you have to file the Income Tax return and you will get the refund from them to your bank account which you will be mentioning in the IT return.

    In your case new regime option seems to be better.

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  • Calculation of Income Tax has been simplified and there is no room for ambiguity in relation to filling up tax returns.
    There are certain scopes where the tax amount could be saved such availing of house loan from some authorised banks where in you could enjoy tax benefits for the interest component being paid by you along with the principal. You might have taken some health insurance policy in the current year 2020 -21. Similarly other benefits where the taxes could be saved should be looked into.
    However, nothing is indicated from your side other than your deposit of 20 Lakhs and your earning to the extent of Rs 30;000/- per month. Even you did not submit 15 H Form which is normally filled up by the senior citizens.
    While there are two regimes which could be used while filling the income tax returns. In the old regime, there is no tax deduction up to your earnings for Rs 2.5 Lakh. Now let us calculate your earnings and the benefits of standard deduction. In your case,
    Your earnings- Rs 3,60,000/- and the benefits of standard deduction is Rs 50;000/- and hence your taxable income is Rs 3,10,000/- . Taking into consideration of the maximum limit where there is exemption of tax, the amount is Rs 2.5 Lakh and the money for which tax is to be paid is Rs 60,000/-. You are fitting in the slab of 5 percent deduction and hence you need to pay Rs 3,000/- only.
    In the regime of new taxation structure, taxation component would be applicable beyond the income of Rs 5.0 lakh. Since your income does not touch level, you need pay any income tax though filling up tax returns is mandatory up to the age of seventy - five.

  • Income tax is calculated on prescribed rates on the income that you earned during a particular financial year after deducting allowable rebates in india as per the income tax act,1961. If you have no income or no taxable income nothing is required to be paid.
    You have said Rs.20 Lakhs lying in your bank accounts but not clear the nature of your bank accounts or nature of deposits. If the amount is lying in savings accounts then interest earned by you is taxable subject to a deduction of Rs.10000.00 per year u/s 80TTA even you have not withdrawn it from the bank.
    If the amount is lying under deposits accounts then the amount earned by you during a year will be taxable even you have not withdrawn it. So if you earn from the deposits you have to pay the tax on taxable portion.
    Now if your earnings from the deposits is 30000 per month as you declared then bank will deduct @3000 per month and deposits the same against your PAN Number the position will be as follow:

    Total Interest income from F/D , deposits etc other than interest on savings bank /post office............360000/-
    Add: Any other income............................ ..... nil
    Gross Income Rs.360000/-
    Less: Standard deduction 50000/-
    Taxable income (assuming no deductible amount u/s 80ccc ) 310000/-
    Income tax under old regime 310000-250000=60000*10% 6000/-
    TDS by Bank (TAN number of the Bank) ... 36000/-
    Refundable : 30000/-
    Tax under new tax regime (no deduction rebate allowable) on Rs.360000 .... nil
    (Zero tax up to Rs.500000 )
    So your tax will be nil and the whole amount of TDS will be refunded by the income tax department after filling income tax return by you.

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  • Your income is Rs30,000/- per month. It is the interest from your bank deposits. You have no other income.
    Your annual income will be Rs. 3,60.000/-. The slabs are decided based on your income level. The following are the slabs and the rate of tax.

    1.There is no tax up to Rs. 2,50,000 per annum income in both the existing income tax scheme and the new income tax scheme.
    2, If the income is in between Rs. 2,50,001 and Rs. 5,00,000, the tax rate is 5% in the existing scheme and NIL as per the new system.
    3. If the income is in between Rs. 5,00,001 and Rs. 7,50,000, the rate of tax as per the existing scheme is 20% and as per the new scheme it is 10%
    4, If the income is in between Rs. 7,50,001 and Rs. 10,00,000, the rate of tax as per the existing system is 20% and as per the new system it is 15%
    5. If the income is in between Rs. 10,00,001 and Rs. 12,50,000, the rate of tax as per the existing scheme is 30% and as per the new system it is 20%
    6. If the income is in between Rs. 12,50,001 and Rs. 15,00,000, the rate of tax as per the existing scheme is 30% and as per the new system it is 25%
    7. if the income is above Rs. 15,00,000 per annum the rate of tac will be same in both the systems and it is 30%
    There will be a surcharge to be paid and it will change with the income levels.
    There are certain deductions and concessions allowed as per the existing IT rules. There is a standard deduction from the income and then there are some deductions for savings, loans taken for house construction, etc.
    In your case what are the savings is not known. If we say there are no savings.
    your income will be Rs.3,60.000/- per annum. The standard deduction allowed is Rs. 50,000/- so your taxable income is Rs,3.10.000/-. For the first Rs2,50,000/- there is no tax. So you have to pay a tax on the income of Rs.60.000/- only at the rate of 5%. That is the tax you have to pay is Rs,3000/- (5% of Rs,60,000/-). You will not be coming into the tax level if you opt for the new system. In the old system, you are eligible for tax exemptions on some savings. You can save up to Rs1.5 lakhs under 80CC.

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  • Based on the new budget policy, the scale of tax has been decided as follows.

    Upto Rs 2.5 Lakh - Nil
    Rs 2.5 Lakh to Rs 5 Lakh - 5% -
    Rs 5 Lakh to Rs 7.5 Lakh - 10%
    7.5 Lakhs to Rs 10 Lakhs - 15%
    10 Lakhs to 12.5 Lakhs - 20%
    12.5 lakh 15 lakh rupees - 25 percent
    Above 15 lakh rupees - 30 percent

    There is a tax benefit on investment in FD (Fixed Deposit), but the interest on the money deposited in FD is subject to income tax. Hence banks deduct TDS on this interest. The limit of deduction is up to Rs 1.50 lakh. The tax saving FD has a maturity period of 5 years and cannot be broken before maturity.

    There is a provision for exemption from TDS for interest income within the limit of Rs. 40000 per annum from bank FD. This limit is for people under 60 years. TDS is not deducted from the interest income from the FD of the post office. In the case of senior citizens over 60 years of age, savings account, FD / TD, post office schemes, any type of deposit made in co-operative banks, up to Rs 50000 interest in a financial year is tax-free.

    In May 2020, the government cut TDS and TCS rates. Under the deduction, the rate of TDS on FD interest has come down from 10 percent to 7.5 percent. This rate is effective until March 2021. However, the rate is 20 percent if PAN details are not given.

  • Taxation is a huge department having so much of provisions and rules for calculating the tax liability of a person. An assessee's income is classified into 5 heads: salary, profits/gains from business/profession, capital gain, income from house property, and other sources. Based on the head of income, tax rates are applicable for the income. However, the total income of an assessee are taxed at slab rates according to the age of the person(Normal citizen, Senior citizen, Very senior citizen). Also, the government has introduced new regime of taxation which doesn't allow claim of deductions. It is up to the citizen to choose between the old regime and the new regime by making enough calculations and assessing which is beneficial to them.
    As per the old regime, if a person's total taxable income (after claiming deductions) is less than or equal to Rs. 5,00,000 , then he/she will be given a rebate of Rs. 12,500 i.e the ultimate tax will be zero. But if the income happens to exceed Rs. 5 lakh, the taxable slab rates are:
    1) Income Rs. 0 to Rs. 250000 = Nil (for normal citizens). The exemption limit would be Rs. 300000 and Rs. 500000 for senior citizens and very senior citizens respectively.
    2) Income Rs. 250001 to Rs. 500000 = 5% ( for normal citizens) ; Rs. 300000 to Rs. 500000 = 5% (Senior citizens)
    3) Income Rs. 500001 to Rs. 1000000 = 20% ( for all)
    4) Income above Rs. 1000000 = 30% ( for all)

    Under the new regime, the slab rates are:
    1) Up to Rs. 250000 = Nil
    2) Rs. 250000 to Rs. 500000 = 5%
    3) Rs. 500001 to Rs. 750000 = 10%
    4) Rs. 750001 to Rs. 1000000 = 15%
    5) Rs. 1000001 to Rs. 1250000 = 20%
    6) Rs. 1250001 to Rs. 1500000 = 25%
    7) Above Rs. 1500000 = 30%

    However, an individual is not allowed to claim any deductions when he/she chose to go under the new regime.

    These are just the slab rates under the old regime and ultimately, surcharge and CESS would be charged on the tax amount. Besides this, there are marginal relief in certain cases.

    Coming to your case, if you earn Rs. 30000 p.m (i.e Rs. 360000 p.a), your taxable income is less than Rs. 500000, which means your income is tax-free( Assuming you have no other income). However this happens only in the case of old regime. Also, the type of income should be taken into consideration, for example if it is a rental income, the person paying rent would have deducted TDS, and in that case, you can claim refund on filing your tax return.
    There are many deductions available for the taxpayer. A standard deduction of Rs. 50000 is allowed for salaried persons, 30% of Gross Annual Value of house is allowed as a deduction, Rs. 50000 for senior citizens is allowed as a deduction on interest from FD and Post office saving deposits and interest from banks.Like this there are many.

  • There are major five heads in which income generated is classified:
    1]Income from house property
    2]Income from other sources
    3]Profit and Gain from business and profession
    4]Capital Gain
    5]Income from salary
    As per your case you are earning interest income and hence it will be classified under the head, income from other sources. Tax slabs prescribed are:

    Up to 2,50,000, basic exemption (Note: In case of resident senior citizen this is up to 3,00,000 and for resident super senior citizen this limit extends to 5,00,000.)
    2,50,001-5,00,000 taxable @ 5%.
    5,00,001-10,00,000 taxable @ 20%.
    Above 10,00,000 taxable @ 30%.

    Further, if income is more than 50,00,000 surcharge rates are applicable on tax amount @ 10%, 15%, 25% and 37%. After all that calculations health and education cess is chargeable @ 4%.

    Since your income is less than 5,00,000 your net tax liability will be less than 12,500 and hence you will get exemption under the section 87A as your income is not derived from income under long term capital gain 112A. Therefore, your net tax liability will be nil.

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