Income tax calculation in India is based on the income tax slabs determined by the Central Government for each financial year. Here is a simplified guide on how to calculate income tax for the financial years 2021-2022 for Odisha Government employees:
1️⃣ Determine your Gross Income: This is the total income you earn in a year before deductions. It includes salary, allowances, bonuses, and income from other sources.
2️⃣ Apply Deductions: From your Gross Income, you can deduct the exemptions available under sections such as 80C, 80D, 80G, etc. of the Income Tax Act, 1961. For example, Section 80C allows a maximum deduction of Rs 1.5 lakh per year invested in tax-saving instruments like life insurance, Provident Fund, etc.
3️⃣ Calculate Net Taxable Income: Subtract the deductions from your Gross Income to get your Net Taxable Income.
4️⃣ Apply the Correct Income Tax Slab: Depending on your age and Net Taxable Income, apply the correct income tax slab for the financial year 2021-2022. For instance, if your age is below 60 and your Net Taxable Income is between Rs 5 lakh to Rs 10 lakh, the tax rate is 20%.
5️⃣ Calculate Tax: Multiply your Net Taxable Income by the tax rate. If the Net Taxable Income is Rs 6 lakh and the tax rate is 20%, the tax would be Rs 1.2 lakh.
6️⃣ Apply Cess: A 4% Health and Education Cess is applied to the calculated tax. So, if your tax is Rs 1.2 lakh, the Cess would be Rs 4800.
7️⃣ Calculate Final Tax Liability: Add the tax and the Cess to calculate your final tax liability.
📈 Please check the latest tax slabs and deductions for the current financial year from the official website of the Income Tax Department, Government of India, or consult with a tax advisor for accurate calculations. Remember, it’s important to file your income tax returns on time to avoid penalties.