How to Use a Tax Calculator Effectively?

Calculating taxes and determining the exact tax liability is the toughest job. The reason being is that there are several factors which need to be kept in mind while doing calculations. The income tax department works with a high degree of efficiency and ascertains individual tax amount by considering the residential status, income slab, type of person and so on. But, for a layman, it is very difficult to do tax calculations and compute the tax liability. For that, the tax calculator is used in India. Let’s understand what it is and how we can make the best use of it.

Tax Planning Calculator - Meaning

As the name suggests, it is used for the purpose of making calculations regarding the total tax liability of the assessee for a financial year. It is designed by considering various factors like the residential status, the age of the assessee, annual income, and gender. These are the prime factors which are used to compute the net liability of taxes. Moreover, such calculators are helpful in making better plans for tax planning as well. There are various online tax calculators with an easy-to-use interface which helps in computing the tax liabilities in a simple process. They further help in tax return filing as you already know your payable tax amount.

Steps to Use Tax Calculator

• Fill in the Basic Details - Taxes are computed on the basis of the residential status and age of the assessee. While using the tool, you must provide the details regarding your status, i.e., whether you are a resident, non-resident, or not ordinary resident of India. Further, you need to mention the type of person you are, i.e., whether you are an individual, HUF, company, AOP, BOI, firm, or cooperative society. In the case of an individual, you are requested to provide the age details as well as the tax slab rates are different for different age groups.
• Provide Income & Deduction Information - It is the further and important requirement in the tax planning tool to mention the income of the assessee. The income is the sum one has earned in the whole financial year which comes under the tax bracket and liable for taxability. Furthermore, there are certain deductions allowed to the assessee falling under subsections of Section 80C of the Income Tax Act, 1961. 
• Compute Liability - Once you are done with providing the detailed information, you can easily compute the total payable amount for taxes in the financial year. 

Hence, the tax calculator is very helpful in calculating the exact sum of money that one has to pay to the tax department in India. You too can compute the liability for the financial year and make better plans to reduce the sum payable.

The online tax calculator available at MySIPonline is quite helpful in tax planning. If you are looking for the same, you must try their tax solutions which are easy-to-use and very efficient.