I shall insert an Excel worksheet for Income Tax Calculation on salary for the Financial Year 2010-11 (Assessment Year 2011-12). Prior to that, I wish to explain some details to get an idea to enter the inputs.
Applicable Deductions on Gross Salary
On gross salary, the following deductions are applicable:
- Professional Tax
- House Rent in excess of 1/10th of salary subject to a ceiling equivalent to HRA
- Interest on Housing loan subject to a ceiling of Rs. 1,50,000
- Refund on Housing loan, savings, tuition fee for 2 children, etc., altogether subject to a ceiling of Rs. 100,000
- In addition, savings on infrastructure bonds up to Rs. 20,000
- Other than the above one lakh, Rs. 15,000 to Rs. 20,000 towards mediclaim premium, Rs. 40,000 to Rs. 60,000 towards treatment for specified diseases like Motor Neuron disease, Rs. 75,000 to Rs. 100,000 towards disability, etc., are also admissible for deduction
Calculating Taxable Income
Now, taxable income can be calculated as follows:
Gross salary - total deductions = Taxable income
Taxpayer Categories
Taxpayers can be categorized into 3 groups:
1. Non-Seniors - Male
2. Non-Seniors - Female
3. Senior Citizens (65 years old & above)
If the taxable income is Rs. 2,40,000, a Senior Citizen is fully exempted from paying tax. Non-Senior Female has to pay in excess of Rs. 1,90,000 and Non-Senior Male in excess of Rs. 1,60,000.
Beyond the above income, one has to pay 10% up to Rs. 5,00,000, 20% thereafter up to Rs. 8,00,000, and 30% in excess of Rs. 8,00,000. In addition, an education cess of 3% will be charged on the Total Tax.
Example Calculation
Gross income of a Non-Senior Male - Rs. 12,00,000
Deductions (actual):
- Professional Tax - 12,000
- Housing loan interest - 2,00,000
- Total savings/deductions - 2,50,000
- Savings on Infrastructure bond - 25,000
- Other deductions over 1,00,000 - 50,000
Admissible total deductions (subject to ceiling limits) - 12,000 + 1,50,000 + 1,00,000 + 20,000 + 50,000 = 3,32,000
Taxable income, 12,00,000 - 3,32,000 = 8,68,000
For Non-Senior Male:
- Rs. 1,60,000 is exempted.
- For the next 3,40,000 (5,00,000-1,60,000), 3,40,000 x 10% = 34,000 -(1)
- For the next 3,00,000 (8,00,000-5,00,000), 3,00,000 x 20% = 60,000 -(2)
- For the next 68,000 (8,68,000-8,00,000), 68,000 x 30% = 20,400 -(3)
Tax - (1) + (2) + (3) = 1,14,400
Also, for Non-Senior Female, Tax is 1,14,400 - 3,000 = 1,10,400
and for Senior Citizens, Tax is 1,14,400 - 8,000 = 1,06,400
Education Cess, 1,14,400 * 3% = 3,432
Total Tax - Rs. 1,17,832
See Excel Sheet. Enter gross salary and deductions/savings applicable in the green color column. Results will be in the yellow color. The red color is used for static data.
Regards,
ABBAS.P.S,
Secretary,
ITI Employees' Association,
ITI Ltd, PALAKKAD - 678 623,
KERALA, INDIA.
Ph. [Phone Number Removed For Privacy Reasons]