One of the major concerns of every professional- be it a serviceman or a business owner is managing taxes. There are so many different types of taxes and the policies related to them which makes things even more complex. If you are not familiar with the various ways to manage your finances well, it can lead to hefty fines. There are also tax exemption laws and related calculations that you can avail, provided the taxes are paid on time. The best way to manage all these own your own is by using the right tax calculator for your purpose. There are different types of tax calculation tools for different tax slabs and it is important to understand your tax slab particularly in order to manage the tax correctly. The policies related to taxes keep changing from time to time and the calculation methods are accordingly updated. When you are familiar with them, it is much easier to keep the records accurately. The following are some of the tips which will help you do this on your own and also make the most of the right tax calculator.
Know your tax slab
It is very important to know the tax slab that you belong to in order to calculate it correctly. The tax slab depends on your yearly income and the percentage of taxation changes accordingly. This means, your tax calculation methods will also vary with the slab which you belong to. The next taxable income is considered for finding out the tax slab. Once you know the rules and regulations related to the tax slab, you can easily make the calculations. Do note, as your income increases, eventually you will fall under a different slab and hence, the method of tax calculation should also be upgraded accordingly.
Arriving at a net taxable income
Till a certain income, you are not eligible for paying taxes or can enjoy tax exemptions. However, you must be aware of the minimum net taxable income in your region so that you can start paying it in time and avoid the fines associated with it. The policies often changes every financial year and you must stay updated about whether your present net income has entered the taxable slab or not. If you are paying the taxes in time, you will also be eligible to claim the tax return and that can be very beneficial in terms of setting a good financial record. To find out the net taxable income, you must deduct the total amount of deduction from the total income that is taxable. This can be accurately done when you are using any type of tax calculator.
Tax exemption policies on the basis of age
There are some regions where higher tax exemptions are offered for senior citizens. However, in the current financial year according to the new rules for taxes, there is no such benefit even for those between 60-80 years age. This means, the gross income of this age group is likely to be affected in the present tax regime. The exact figure and amount that affects the age group can be found out using any tax calculator and also the net income of the person. The amount may vary from person to person depending on the taxable income slab they are falling in.
New deduction claims
As per the new rules of taxes, you can claim a deduction under 80CCD (2) of the income tax act, 1961. This means, there are more return benefits that you can enjoy compared to earlier policies. The employee as per this rule can claim maximum of 10% of the salary which includes basic along with dearness allowance. This again will vary from one tax slab to another. But nevertheless will give the employees better scope for savings and as a result, encourage more and more people to dedicatedly pay their taxes on time.
In order to make sure that your tax management is accurately done, using a tax calculator is the easiest way. There are several very accurate tax calculation tools available and it is elemental to understand which is going to the right option, based on your taxable income slab.