The Role of an Income Tax Calculator in Effective Income Planning

Precisely calculating taxes is one of the biggest tasks that the majority of people struggle with. No matter how hard you try, the complex tax calculation will always leave you confused. That’s why many people have switched to income tax calculators. This simple tool has simplified how people perceive tax filing and planning.
 
If you also have a hard time calculating your income tax returns, you should opt for an income tax calculator. It will be a more convenient and cost-effective option for you than hiring a tax consultant.

Read here to learn about an income tax calculator and how it can help you master your tax liabilities.

Quick Overview of an Income Tax Calculator

Everyone falling under a certain tax bracket is required to pay some amount of their annual income as tax to the government, known as income tax. There are two main ways of paying taxes: the first is the tax deducted at the source while the monthly salary is disbursed, and the other method includes filing taxes through income tax returns.
 
Those who opt to pay tax online through the income tax returns' portal are required to declare dues on all earnings generated from other sources. That’s when a tax calculator comes into the picture. An income tax calculator is an online tool that effectively calculates an individual's income tax slab and tax liability according to their preferences.
 
The majority of IT calculators available online are updated with the changes brought by union budgets for that particular financial year. So you’ll not need to worry about missing out on any critical information related to tax files.
 
Want to try an online tax calculator to calculate your following tax slabs?

Method to Use Online Income Tax Calculator

These steps can serve as a guide for utilising the online tax calculator and approaching your financial planning with greater care.

• Firstly, select the financial year for which you wish to calculate the tax. For example, for the financial year 2023-24, your assessment year (AY) will be 2024-25, and depending on that, you can select any of the options from the dropdown menu.
• Now, you have to select your age slab because income tax mainly differs according to age groups.
• Then tap on the income field option and enter your gross salary, the monthly or yearly salary paid to you without deductions. Also, mention the annual income you generate through other sources. Income earned through other sources mainly includes rental income and interest paid on home loans for let-out or self-occupied property.
• After that, you’ll have to enter the details of the various deductions, including the basic deductions, and provide information about the details of interest on educational loans & deposits in the savings account, if there are any.
• Next, mention the HRA exemption details, including your primary salary, total rent paid per annum, HRA, and DA.
• Lastly, enter your residential city and click on the calculate option.

The calculated sum would be the income tax you need to pay for the selected year.

Advantages of Income Tax Calculator in Tax Planning

An income tax calculator simplifies the tax planning process to a whole new level. Here are some of the advantages of using it:

• Income tax calculators are meticulously designed with features that eliminate discrepancies. They use built-in algorithms to ensure that their calculations are precise, which helps reduce the risk of human error that can come with manual calculations.
• They simplify the process of tax calculations and are more convenient than hiring a tax consultant for the same. This implies that you can do the calculations at any given time and from any place without having to wait in line or incur consultation fees.
• These simple income tax calculators can quickly give you a rough idea of the tax that you are required to pay. The immediate knowledge helps you understand your financial obligations better.
• They facilitate thoughtful financial planning by educating you about tax liabilities. This means you can strategise on investments, savings, and expenditures, keeping tax implications in mind.
• The personal information you enter into the software is highly encrypted so that no unauthorised third party can access it.

 Overall, these calculators can help you gain insights into your tax situation, identify potential savings, and make informed financial decisions throughout the year.

Tax Planner is Necessary For Effective Planning

One needs to calculate their taxes according to the new tax regime, and the best part of using a renowned income tax calculator like ACKO is that it calculates your taxes according to the new government. ACKO provides an excellent tax calculating option to keep your financial planning on point.

What are you waiting for? Incorporate the use of the ACKO income tax calculator to manage your tax obligations and savings!

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