According to
Government reports, around 1.5 crore Indians pay income tax, which accounts for
just over 1% of the country’s total population. Even though the emergence of
advanced technology and transparent filing procedure has improved the system,
individuals often find it challenging to understand the ever-changing tax laws,
tax rebates, etc.
In order to
simplify the process of calculating tax liabilities, online tools like income tax calculator
2021 have been introduced. Taxpayers can provide certain information to
estimate their taxes, even compare their liabilities for both old and new tax
slabs, introduced in the Union Budget 2020-21.
However,
before delving further into understanding the online tax calculator’s
mechanism, it is necessary to have a complete idea regarding the current tax
regime and how it influences the tax liabilities. It is advisable to start with
understanding different income tax slabs before switching to the new tax regime
from the existing one.
Tax slabs as per FY 2020-21
The income tax
slab system refers to different tax rates depending on different ranges of
income. This means the tax rates will inevitably increase in case the
taxpayer’s monthly income increases. In order to draw a comparison between the
old income tax slab for AY 2020-21 and for AY 2021-22, here are a few pointers
individuals should take note of:
●
Annual income up to Rs.2.5 lakh: Nil income tax.
●
Individuals with yearly income between Rs.2.5 lakh
to Rs.5 lakh: 5% (Also, tax rebate under Section 87A will be available)
●
Between Rs.5 lakh and Rs.7.5 lakh: 10%
●
Annual income range from Rs.7.5 lakh to Rs.10
lakh: 15%
●
Income range between Rs.10 lakh and Rs.12.5 lakh:
20%
●
Between Rs.12.5 lakh to Rs.15 lakh: 25%
●
Individuals having an annual income of more than
Rs.15 lakh: 30%
Having a clear
understanding of your tax liabilities is important, especially if you are
planning to avail home loans to invest in housing properties. In this regard,
there are certain home loan tax exemptions and benefits every new and existing
borrower should have at their fingertips. Apart from the aforementioned
aspects, there are certain other tax exemptions available under the new tax
regime. For instance -
●
For NRIs, irrespective of age, the tax exemption
limit will be Rs.2.5 lakh.
●
As a part of your income tax liability, 4% of
additional health and education cess will be added where the rate has been
increased from the previous FY. With such changes, it is necessary to keep
track of your tax liabilities and keep calculating them using an income tax calculator
2021.
Understanding
these basic changes and relevant aspects of the income tax regime is required
to plan out other expenses as well. Additionally, tax-related documents like
ITR are extremely important while availing home loans. Nonetheless, if you are
deemed creditworthy by financial institutions, you can also enjoy the benefits
of pre-approved others and do away with undertaking the complicated
documentation process.
Apart from
home loans, these offers are also available on other financial products,
including loan against property, and help expedite the home loan application process. In order to make the
most of its benefits, make sure to check your pre-approved offer by submitting
your name and contact number.
While
calculating your tax liabilities using the income tax calculator 2021, make
sure to provide exemption details by way of interest paid on loans, interest
income, taxable salary, etc. Also, take note of home loan tax benefits for
under-construction property work, to ensure you can maximise your benefits on
tax payments.
