Hi Friends, I am Preetham. I am preparing for CA exam. I want to know about income tax. Can I know, How to compute the total tax liability?
Computation of gross total income and Taxable Income Particulars Amount Income from salary XXXXX Income from house property XXXXX Profits and gains of business or profession XXXXX Capital gains XXXXX Income from other sources XXXXX Gross Total Income XXXXX Less : Deductions under Chapter VI-A (i.e. under section 80C to 80U) (XXXXX) Total Income (i.e., taxable income) XXXXX Note : Inter source losses, inter head losses, brought forward losses, unabsorbed depreciation, etc., (if any) will have to be adjusted (as per the Income-tax Law) while computing the gross total income.
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.
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