9 Easy Steps to Calculate Your Tax Liability

Here are 9 very easy steps to calculate your taxable income and income tax on taxable income. The persons who are confused to calculate their tax for A.Y. 2018-19 & A.Y.2017-18 should read the following article to calculate your income tax very easily with step-by-step guide. If you have any doubt regarding the calculation of taxable income or income tax should comment below. We will reply you as early as possible.

The following article is applicable for individuals/HUFs/AOP/BOI/Artificial Judicial Persons for A.Y.2018-19 & A.Y.2017-18.

Computation/Calculation of Taxable Income

  • Step 1: Calculate income under each head of income; for example: salary, house property, profession, business, capital gains, and income from other sources.
  • Step 2: Don’t forget to add income of any other person, which is required to be clubbed.
  • Step 3: Total the incomes as we discussed above.
  • Step 4: Deduct losses as per set off of losses provisions if applicable.
  • Step 5: Deduct deductions, which allowable as per under section 80C to 80U to arrive at total/taxable income.

Computation/Calculation of Tax Liability or Tax Refund

  • Step 1: Calculate Tax on Income(s) taxable at special rates; short-term capital gains, long-term capital gains. Please check special tax rates/Capital Gain Tax Rates for A.Y.2018-19 & A.Y.2017-18 here.
  • Step 2: Calculate Tax at normal rates on balance of taxable income.  Please check normal tax rates/Income Tax Slab for A.Y.2018-19 & A.Y.2017-18 here.
  • Step 3: Now, do sum of tax calculated in Step 1 & Step 2.
  • Step 4: Deduct tax rebate u/s 87A.
  • Step 5: Now, add surcharge at applicable as per income tax slab
  • Step 6: Add education cess @ 2% and secondary & higher education cess @ 1% on net income tax calculated in Step 3 and in step 4.
  • Step 7: Deduct TDS/TCS if any from the tax calculated in step 6.
  • Step 9: Deduct advance tax if any.
  • Step 9: Balance is your tax payable or tax refund.

Note: Any tax payable or tax refund should be rounded off to the nearest multiple of Rs.10. 

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