Question

How to calculate Income tax?

Answer 1

Hai Haezal and here is your answer ...

Question -: How to calculate income tax ?

Annswer-: To calculate income tax , Rate of the income should reach upto 25000 rs as NIL .Yhe education cost must last two percentage .
The solution or the method used for the calculation of the income tax are that .
1- The income tax above rs. 1000000 rate of tax of 30 percentage .
2- Income that is higher rs . 250000 upto rs . 500000 rate of the tax.
3- the income that is upto the amount or rs .250000 is the rate of tax in NIL .
4- Income above Rs . 500000 upto the amount of rs. in 100000 in rate of the tax of 20 percentage .
5- Education taxes cess at 2 percentage of as also the secondary more education cess at 1 percentage that should or to be added .


HOPE IT HELPS YOU .....

Answer 2

Lets begin by learning the meaning of two words.

*Assessment Year* & *Previous year*

Do you know ??there are two years ..

Not assessment and previous year

*Calendar year* and *Financial year*
Calendar year = 1 January to 31 December
Financial year = 1 April to 31 March

In taxation, year means financial year and not calendar year

1 April 2018 to 31 March 2019 is the Assessment Year

1 April 2017 to 31 March 2018 is the Previous year (As Per Income Tax Act, 1961 )

So income tax is Paid on the income earned in the previous year .

Suppose income earned during 1 April 2017 - 31st March 2018 (previous year) is 40Lakhs then we have to pay income tax for that amount in this year ..That is 1 April 2018 - 31 March 2019.. We will assess/calculate tax on previous year in this year ..This is why it is called as *Assessment Year*

If we earn 40 lakhs during this year (1 April 2018 - 31 March 2019).. Then we must pay income tax on this amount in the next year (1 April 2019 - 31 March 2020)
Then 1 April 2018 - 31 March 2019 will be the Previous year and 1 April 2019 - 31 March 2020 will be the Assessment Year at that time..

Now how to calculate ''Income''

Simple ! add all the money you recieve in the previous year..

Income from Salary, Business, Profession, House property, Capital gain(money recieved after selling some property) ,other income etc .. add everything ...U will get an amount "it will be the income earned in the previous year" Suppose we got 49 lakhs after Adding everything.

Now Lets calculate Income Tax ..

*Income tax Slab rates* -

0 - 2,50,000 = nil

Above 2,50,000 - till 5,00,000 = 5%

Above 5,00,000 - till 10,00,000 = 20%

Above 10,00,000 = 30%

..Now Lets calculate tax on 49,00,000

49,00,000 is above 10,00,000 so rate is 30%

49,00,000×30% = 14,70,000 will be the income tax..

If u think this is the way to calculate tax then you were fooled successfully.

*Income tax Slab rates* not *Income tax flat rates* If its a flat rate then u can do like this..

Flat rate is for companies ; Slab rate is for people

If a company earns 100 crores then tax will be @ 30% flat rate ; 30 crores will be the tax (excluding surcharge)

But for people its slab rate

49,00,000 - Income

Income tax Slab rates -

0 - 2,50,000 = nil

Above 2,50,000 - 5,00,000 = 5%

Above 5,00,000 = 20%

Means those who earn till 2,50,000 Per year need not pay any income tax

Lets calculate..49,00,000

Above 10,00,000 = 30%

How much amount in 49,00,000 is above 10,00,000 .

49,00,000 - 10,00,000 = 39,00,000 is above 10,00,000. So 39,00,000×30% = 11,70,000

Not done yet ! Put this first 10,00,000 aside

In this first 10,00,000 ; 0 - 2500000 = Nil tax = 0

Above 5,00,000 - 10,00,000= 20%.how much amount is above 5,00,000 =5,00,000 × 20% = 1,00,000

3 slabs:- 0 + 12,500 + 1 ,00,000 + 11,70,000 = 12,82,500 is the tax

Confused??? Suppose income is 9,00,000

0 - 2,50,000 = nil = 0

Above 2,50,000 - 5,00,000 = 5% ; 2,50,000 × 5% =12500

Above 5,00,000 - 10,00,000= 20% ;4,00,000 × 20% = 80,000

Tax = 0 + 12500 + 80,000 = 92,500

Suppose income - 8,00,000

0 - 2,50,000 = nil = 0

2,50,000 - 5,00,000 = 5% = 250000×5% = 12500

Above 5,00,000 - 10,00,000= 20% = 3,00,000× 20% = 60000

Tax = 0 + 12500 + 60000 = 72500

Suppose income - 4,00,000

0 - 2,50,000 = nil = 0

2,50,000 - 5,00,000 = 5% = 150000 × 5% = 7500

Tax = 0 + 7500 = 7500

Suppose income is 2,50,100

0 - 2,50,000 = nil = 0

250000 - 5,00,000 = 5% = 100×5% = 5

Tax = 0 + 5 = 5

Apart from this tax we need to pay Education cess of 4% which is calculated on the income tax amount.

As Per the recent amendment in the Income tax Act, 1961 .Rebate under 87A is available for income upto 5,00,000 .. Whereas Above 5,00,000 treatment remains unchanged i.e., without any Rebate .. (Refer the Attachment to know its effect)

Money on which tax is not Paid is called *Black Money*

Do u know ?? only 4 - 5% indians pay income tax.. Means only 53 lakh people inthis Country earn more than 2,50,000 Per year