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INCOME-TAX-CALCULATOR

Aim and Purpose of Income Tax Calculator-

The main aim of our project is to calculate the income tax payable for different assess (Individual,Partnership,Company). This project aims at providing a user-friendly approach to calculate the payable tax without digging into complex details and calculations. Our income tax calculator helps user to manage their taxes.

Basic Fundamentals Of Income Tax Calculations –

Income Tax is an annual tax on income. The Indian Income Tax Act (Section 4) provides that in respect of total income of the previous year of every person income tax shall be charged for the corresponding assessment year at the rates laid down by the Financial Act for that assessment year. Section 14 of the Income Tax Act further provides that for the purpose of charge of income tax and computation of total income all incomes shall be classified under the heads of income. Salaries Income from house property Profits or gains of business or profession Capital gains Income from other sources . The total income from all the above heads of income is calculated in accordance with the provisions of the Act as they stand on the first day of April of any assessment year. But tax rates are not applied on total income, tax rates are applied on Total Taxable Income which is calculated after the deductions in total income. Tax deductions is a reduction in tax obligation from Gross Income. Tax deduction varies in amount as different incomes are treated differently under various sections of Income Tax Act these are :

  1. 80C (Bank FD's, LIC Premium , Tuition fees etc.)
  2. 80CCC ( Pension Funds)
  3. 80CCD ( Pension Funds by Central Government)
  4. 8OTTA ( Interests on Bank Savings Account)
  5. 80CCG (Equity Saving Schemes) 80CCF (Long Term Infrastructure Bonds)
  6. 80D (Medical Insurance)
  7. 80E (Education Loan) Other sections are 80EE, 80G ,80CGA ,80GGB ,80GC ). The total deductions from all the sources is calculated in accordance with the provisions of the Act as they stand on the first day of April of any assessment year.

Importance of Income Tax Calculator-

An Income tax calculator is an important tool designed to calculate how much income tax you are liable to pay in any given financial year. The calculator provides an approximate figure of your income tax liability by taking into account various data such as your income, deductions, HRA exemption, etc.

Important Terms and Definitions in Tax Calculation

  1. Assessment Year: When your income for a certain financial year is assessed in the coming financial year, it is referred to as an assessment year.
  2. Financial Year: The period between the current year’s April 1st and the following year’s March 31st. This is the time period wherein you are required to collate all your documents and submit your investment proofs.
  3. Previous Year: The financial year that acts as a precursor to the following assessment year. Your income for the current year is assessed in the next year (assessment year).
  4. Deduction: It is a reduction in the total taxable income based on Section 80 and Chapter VI-A. Specific kinds of spending such as investment in Life insurance policies and payment of children’s tuition fee help you avail a tax deduction.
  5. Exemption: It is a specific amount that is excluded from the gross total income before calculating tax. Exemptions are available under Sections 10 and 54. Interest earned from tax-free bonds and salary components like LTA are examples of exemptions.

Framework of Income tax calculation System

Our calculator has a very simple design, any user who is not aware of basic calculations involved in calculating income tax can easily operate. User needs to enter their details like Name, age and address for record purposes. After entering basic details Users needs choose from the list of options provided.

  1. Tax for INDIVIDUAL
  2. Tax for DOMESTIC COMPANY
  3. Tax for FOREIGN COMPANY
  4. Tax for PARTNERSHIP FIRM/LLP/LOCAL AUTHORITY
  5. Tax DETAILS(perc.)

If INDIVIDUAL is selected, Users now need to enter some basic information. Then users need to enter the sum of all deductions (pensions, education loan, medical insurance etc.). In other cases, Users now need to enter their total annual turnover and income (sum of salaries, profits, capital gains etc.) for the current assessment year. After providing the above inputs, Users need to click on the calculate button and the output will be displayed.