How to Calculate Income Tax? - Calculate Net Income or Total Income
- Find Tax Rates applicable for AY 2008-09 and Calculate Tax payable
- Less : Rebate under section 88E
- Add Surcharge for AY 2008-09
- Add Educational cess for AY 2008-09
- Less : Rebate or Relief under sections 89/90/90A/91/110
- Less : any advance taxes, TDS, or TCS paid for AY 2008-09
Topics Covered in this Page
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How to calculate Net Income or Total Income? The computation of total income shall be made as under : - Go to Top
How to Calculate Income Tax for the Agricultural Income? Clubbing of Agricultural Income is applicable, If the Total Income (chargeable at Normal Rates) is more than the maximum amount not chargeable to Income-tax. And the Agricultural Income is more than Rs.5,000. Agricultural Income Need not be clubbed in the following cases: - If Total Income (taxable at Normal Rates) is not more than the maximum amount not chargeable to income-tax, there will be no tax. Similarly, if agricultural income is not more than Rs.5,000 (including the cases of agricultural loss).
The clubbing of agricultural income is done as under: - Tax on [Total Income (Normal Rate) + Agricultural Income] | xxx | Less: - Tax on (Agricultural Income + Basic Exemption Limit) | xxx
--- | Tax on Total Income (Taxable at Normal Rate) | xxx
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Surcharge is payable by Individuals / HUFs / AOPs / BOIs at the rate of 10% of Income tax , if the Total Income exceeds Rs.10,00,000. Artificial Juridical Persons at the rate of 10% of Income tax. However, while calculating surcharge 'marginal relief' is provided to Individuals & HUFs , as under: - Surcharge Marginal Relief Calculation : - Tax on Total Income (including Surcharge but excluding Education cess) | | xxx | Less: - Tax on Total Income of Rs.10,00,000 | xxx | | Total Income minus Rs.10,00,000 (TI - Rs.10,00,000) | xxx
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--- | Marginal Relief (if positive) | | xxx
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The surcharge payable by Firm or Domestic Company is 10% of Income tax. However, while calculating surcharge 'marginal relief' is provided to Firm or Domestic Company, if the Total Income exceeds Rs.1 Crore. Calculation Surcharge Marginal Relief: - Tax on Total Income (including Surcharge but excluding Education cess) | | xxx | Less: - Tax on Total Income of Rs.1,00,00,000 | xxx | | Total Income minus Rs.1,00,00,000 (TI - Rs.1,00,00,000) | xxx
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--- | Marginal Relief (if positive) | | xxx
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Special rates have been prescribed under various provisions of the Act, for specific incomes, either as concessional or exorbitant rate. Some of the special rates prescribed to calculate income tax under Chapter XII of the Income Tax Act, India are given below.
Special Tax Rate for Short Term Capital Gains Section Ref 111A Nature of Income Short term capital gains on listed shares transferred through Recognised Stock Exchange. Tax Rate 10% Remarks (Further aspects to be considered) Transactions should be attracted to Securities Transaction Tax. Where the assessee is an Individual or a HUF, being a Resident, the short-term capital gains shall be reduced by the amount of difference between the basic exemption limit and Total Income (Excluding short-term capital gain), if such reduced total income is less than the basic exemption limit. Read more about Short Term Capital Gains
Special Tax Rate for Long Term Capital Gains Section Ref 112 Nature of Income Long term capital gains on listed securities and Zero coupon bonds. Tax Rate Remarks (Further aspects to be considered) Where the assessee is an Individual or a HUF, being a Resident, the Long-term capital gains shall be reduced by the amount of difference between the basic exemption limit and Total Income (Excluding long-term capital gain), if such reduced total income is less than the basic exemption limit. Read more about Long Term Capital Gains Capital Gains Exemptions u/s 10 Capital Gains Exemptions u/s 54
Special Tax Rate for Winnings Section Ref 115B Nature of Income Winnings from lotteries, races, crossword puzzles, gambling, etc. Tax Rate 30% Remarks (Further aspects to be considered) Tax at flat rate of 30% on the winnings is payable, even though the normal total income may be less than the basic exemption limit.
Income from Other Source Do you have any Income from other sources such as Dividend, Lotteries, Family pension? Then Click here to know how they are added to Calculate Net Income. Go to Top
Income Tax Calculation
| Steps to calculate Income tax | Calculation | Particulars | Amount |
|---|
| Step 1 | | Tax on Total Income (Normal Rate) | xxx | | Add | Tax on Total Income (Special Rate) | xxx | | Tax on Total Income | xxx | | Step 2 | Less | Rebate under section 88E | xxx | | Tax on Total Income (after rebates) | xxx | | Step 3 | Add | Surcharge | xxx | | | xxx | | Add | Educational Cess @ 2% | xxx | | Add | Secondary and Higher Education Cess @ 1% | xxx | | Net Tax Payable | xxx | | Step 4 | Less | Rebate or Relief under sections 89/90/90A/91/110 | xxx | | Tax Payable on Total Income | xxx | | Step 5 | Less | Advance taxes, TDS, TCS | xxx | | Net Tax Payable or Refundable | xxx |
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Click here to know the Deductions available
Documents Required for Indian Income tax Computation and Return Filing.
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