How to calculate taxable Income in 2019-20 in old tax regime
Feb 13, 2020, 17:58 IST
In February 2019, the Central Government revised income tax slabs for different categories of taxpayers. To know your taxable income, you need to figure out in which tax slab you fall into and also know how to calculate the gross salary for which the taxes are applicable. Here we discuss the different steps of calculating the taxable income in 2019-20.
Step-1:
Know the current income tax slabs for different salary ranges:
Step-2:
Calculate your gross salary in the following way:
Since the income tax rules in India charge taxes only depending on the gross salary, you must calculate your gross salary for knowing your taxable income.
Know your CTC
CTC or cost to company is the total amount that a company is spending on you. You will find that most companies mention CTC in your appointment letter. CTC will include the direct and indirect benefits the company gives you, your contributions towards savings, all kinds of allowances, incentives, bonuses, company given accommodation and others.
Calculate your gross salary
To calculate your gross salary, you must take out the EPF and Gratuity contribution from the CTC.
Example-1:
If your CTC is Rs. 4,00,000, your gross salary will be CTC minus (Gratuity + EPF)
Gross salary: Rs. 4,00,000 minus (Rs. 21,600 - Rs. 18,326) = Rs. 3,60,074
Example-2:
If your CTC is Rs. 6,00,000, your gross salary will be CTC minus (Gratuity + EPF)
Gross salary: Rs. 6,00,000 minus (Rs. 32,400 - Rs. 27,489) = Rs. 5,40,111
Your gross salary is Rs. 5,40,111
Your gross salary is your taxable income. You need to apply it in the different tax slabs in order to know how much tax you need to pay.
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Step-1:
Know the current income tax slabs for different salary ranges:
| Income Tax slab | Tax Rate for Category-1: Resident and non-resident individual below 60 years. | Tax Rate for Category-2: Resident Indians who are in the age group of 60 to 80 years. | Tax Rate for Category-3: Resident Indians who are above 80 years of age. |
| Salary up to Rs.2.5 lakh per annum | Nil | Nil | Nil |
| Salary between Rs.2,50,001 and Rs.5,00,000 per annum | 5% of the income which is more than Rs.2.5 lakh plus 4% cess | 5% of the income which is more than Rs.3 lakh plus 4% cess | Nil |
| Salary between Rs.5,00,001 and Rs.10,00,000 per annum | 20% of the income which is more than Rs.5 lakh plus Rs.12,500 plus 4% cess | 20% of the income which is more than Rs.5 lakh plus Rs.10,500 plus 4% cess | 20% of the income which is more than Rs.5 lakh plus 4% cess |
| Salary above Rs.10 lakh per annum | 30% of the income which is more than Rs.10 lakh plus Rs.1,12,500 plus 4% cess | 30% of the income which is more than Rs.10 lakh plus Rs.1,10,000 plus 4% cess | 30% of the income which is more than Rs.10 lakh + Rs.1,00,000 + 4% cess |
Step-2:
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Since the income tax rules in India charge taxes only depending on the gross salary, you must calculate your gross salary for knowing your taxable income.
Know your CTC
CTC or cost to company is the total amount that a company is spending on you. You will find that most companies mention CTC in your appointment letter. CTC will include the direct and indirect benefits the company gives you, your contributions towards savings, all kinds of allowances, incentives, bonuses, company given accommodation and others.
Calculate your gross salary
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In the first place, know your CTC which will include the basic pay, allowances, incentives, bonus, all kinds of direct and indirect benefits that the company gives you. To calculate your gross salary, you must take out the EPF and Gratuity contribution from the CTC.
Example-1:
If your CTC is Rs. 4,00,000, your gross salary will be CTC minus (Gratuity + EPF)
Gross salary: Rs. 4,00,000 minus (Rs. 21,600 - Rs. 18,326) = Rs. 3,60,074
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Your gross salary is Rs. 3,60,074 Example-2:
If your CTC is Rs. 6,00,000, your gross salary will be CTC minus (Gratuity + EPF)
Gross salary: Rs. 6,00,000 minus (Rs. 32,400 - Rs. 27,489) = Rs. 5,40,111
Your gross salary is Rs. 5,40,111
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Your taxable incomeYour gross salary is your taxable income. You need to apply it in the different tax slabs in order to know how much tax you need to pay.