A tax calculator is a device, which performs the function of computing the amount of tax to be paid by an individual taxpayer. Under normal circumstances salary, the capital gains, income from property and other sources like dividends and income from securities are considered to be taxable.
The basic salary and the dearness allowance of an individual are always fully taxable. The house rent allowance is provided to an individual if that person stays in a rented house. The conveyance allowance is paid in order to compensate for the expenses incurred in traveling from home to office.
In India the monthly tax free limit for normal individuals is Rs. 800 and for the physically challenged this limit goes up to Rs.1600. The categories like children education allowance and hostel expenditure allowance don’t come under the purview of taxation.
However, the tax exemption limit depends on the number of children and the amount to be paid per child for the purposes of accommodation and education. The capital gains are another sort of taxable income. The short-term assets are taxed according to relevant tax slabs.
The profit from such asset is derived from the difference between the value at which the particular asset is bought and the value at which it is sold.
The long-term capital assets are always taxed at 20% regardless of the income slab into which the asset owner may fall. The indexation of the long-term capital gains is the main benefit of these. The income that is derived from a house given on rent is liable to be taxed.
While securities like equity shares, equity mutual funds are regarded as tax-free for both the receivers and the payers, the payers need to pay a distribution tax of 12.5% for the debt mutual funds. Prize money received from means like lotteries, crossword puzzles, card games and races as well as interest received on securities can also be taxed. With the complex taxation process of present time, it is imperative to have a tax calculator at hand, which gives a precise idea of how much to pay.
Last Updated on : 5th July 2013