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 | ||
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