Be One Step Ahead! Estimate Your Income Tax Liabilities In Advance

Be One Step Ahead! Estimate Your Income Tax Liabilities In Advance

When it comes to paying taxes, most people scowl. This is not just because they have to pay, but also because many of them do not understand how ‘taxes’ function and how they are to be paid.

Keep reading if you’re attempting to find out what an advance tax payment is and how it works. This post will go over all there is to know about estimating your income taxes in advance with the help of an income tax calculator and we will also cover the tax benefits offered under the money back plan.

What is advance tax payment?

The term “advance tax payment” is self-explanatory: it refers to paying your tax liabilities in advance. This indicates you have already paid your taxes before the fiscal year closes. Pay-as-you-earn tax is another name for advance tax payment.

This tax is levied when your tax-paying capacity surpasses INR 10,000 in a particular fiscal year. There are methods to make the most of it if it is paid in the form of an EMI; however, to do so, you must first comprehend advance tax payment and become acquainted with its components.

The following are the major characteristics of advance tax payment:

  • Advance tax payment is often referred to as a pay-as-you-earn tax.
  • This type of tax is paid before the fiscal year ends.
  • The tax is due in the same year that the income is approved.
  • People who have additional sources of income, such as property rent, interest on fixed deposits, capital gains from the capital market, and so on, pay advance tax.
  • The ability to pay taxes in advance online has made this process much more convenient.
  • The taxpayer who makes an advance tax payment owes more than INR 10,000 in taxes.

How can you calculate advance income tax payments?

To avoid legal ramifications, you must understand how to calculate and pay your advance tax correctly. Continue reading to discover how simple it is to calculate your advance tax liability:

  • An individual’s expected income for a fiscal year is used to compute the advance tax. The taxpayer must include other sources of income, such as rental income, interest income, capital gains, professional income, and so on.
  • The taxpayer must then compute his gross taxable income for the year by simply adding his salary and non-salaried income. The individual should be aware that the sum of his salary and non-salaried earnings might increase his advance tax payment.
  • To calculate your due advance tax amount, go to the most recent income tax slab.
  • Subtract the estimated TDS amount from the due amount based on the qualifying tax slab.
  • If your Advance Tax due exceeds INR 10,000 after TDS deductions, you must follow the Advance Tax Payment rules.

What is an Advance Income Tax calculator?

The Advance income tax calculator is an online tool given by the Income Tax Department of India to assist taxpayers in calculating their due tax amount. Individuals and company owners may use the advance income tax calculator to calculate their taxes quickly and easily.

The following are the primary advantages of utilizing an advance income tax calculator :

  • Easy-to-use intuitive tool
  • Calculates your advance tax liability precisely.
  • Since it is an online tool, it is easily accessible to anyone.
  • Calculates your tax liability in a matter of minutes.

What is Money Back Plan?

A money back plan is a sort of insurance policy. Money back plans pay the insured a certain percentage of the cash promised at regular periods rather than a flat payout at the end of the term. A money back plan is an excellent solution for individuals who do not want to incur chances. It allows you to save money while still maintaining liquidity.

What Are The Tax Benefits Under Money Back Plan

Let us now examine the various parts of the Income Tax Act of 1961 that depicts the tax benefits of money back plan.

Section 80C

The Benefits of these programmes are defined under Section 80C of the Income Tax Act of 1961. Furthermore, the maturity benefit, survivor benefit, and bonuses of monthly money back plan investments are also tax-free. A tax deduction of Rs.1,50,000 can be claimed under Section 80C.

Simply expressed, the greatest amount that can be deducted from the tax that you must pay under section 80C is Rs.1,50,000. This benefit may be used by a person or an HFU. The maximum amount that may be claimed under this clause is Rs.1,50,000 for each of the fiscal years 2018-19, 2017-18, and 2016-17.

However, if you do not receive a tax deduction after paying excess taxes, but you have invested in PPF, Mediclaim, or have tuition costs, an Income Tax Return can be submitted to claim deductions.

Section 80D

This section addresses the Deduction for Medical Insurance Premiums Paid. This deduction is available to a person or an HFU under Section 80D. The highest allowable deduction is Rs 25,000.

You may use this to pay for your health insurance for yourself, your partner, and any dependent children. If they are under the age of 60, they are eligible for an extra Rs 25,000 deduction. The extra deduction is Rs.50,000 if the parents are beyond the age of 60. If the taxpayer and both parents are over the age of 60, the maximum deduction is Rs 1,000,000.

Section 10 (10D)

According to Section 10 (10D) of the Income Tax Act of 1961, the amount guaranteed plus any bonus paid or surrender of policy or on the death of the life assured is tax-free for the recipient subject to a few circumstances.

Wrapping It Up

With our income tax calculator, calculating your taxable income becomes a breeze. Our income tax calculator, which has been updated under the most recent income tax rates and tax laws, ensures that you receive an exact value of payable tax.

Individuals can use an online income tax calculator to exactly determine their Total Income Tax Liability. The income tax calculator can depict a person’s real tax burden by using information such as their annual income, any additional income, allowances, and appropriate tax deductions.

Read More: Is Section 44ADA of the Income Tax Act Optional or Compulsory?