Calculating income tax can be a complicated process. Many taxpayers find it challenging to calculate their income tax liability correctly. An income tax calculator works by taking into account various factors such as the taxpayer’s income, investments, and deductions. These factors are used to arrive at the final tax liability. Here are the steps involved in using an income tax calculator:
Enter Your Income Details
The first step is to enter your income details. This includes your salary, business income, and income from other sources. You will also need to specify whether you are a resident or a non-resident taxpayer.
Enter Your Investment Details
The next step is to enter your investment details. This includes your investments in tax-saving instruments such as Public Provident Fund (PPF), Equity Linked Saving Schemes (ELSS), and National Pension System (NPS). These investments can help you reduce your taxable income and save tax.
Enter Your Deduction Details
The third step is to enter your deduction details. This includes deductions under Sections 80C, 80D, and 80G of the Income Tax Act. These deductions can help you reduce your taxable income and save tax.
Calculate Your Tax Liability
Once you have entered all the necessary details, the income tax calculator will calculate your tax liability. It will take into account your income, investments, and deductions to arrive at the final tax liability.
Check Your Tax Liability
Once the income tax calculator has calculated your tax liability, you should double-check the figures to ensure that they are correct. If you find any errors, you can make the necessary corrections and recalculate your tax liability.
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