Best Answer: First you need to find out your taxable income. This is your total salary and allowances paid out minus exemptions (with respect re-imbursements (section 10) like medical, HRA etc.) minus any interest paid for your housing loan (max 1.5 lakh for self occupied and any amount for house let out) minus deductions under Chapter VI-A (80C, 80CCC etc.). All these information will be available in your Form 16. Once this is got, then the tax is calculated as per Income tax slads specified in the First schedule of the Income tax Act. For FY Apr-2008 to Mar 2009, this is as below.
Exempted upto Rs.1.5 lakh for male assessee under 65 years and 1.8 lakh for female assessees, 2.25 laks for Senior citizens.
Upto 3 lakhs from exemption limit the income tax rate is 10%. From 3 lakhs
to 5 lakhs the rate is 20%. Beyond 5 lakhs it is 30%. You also have surcharge and education cess on the tax calculated there on.
For example, if your are a male of age 35 years then, assuming the following
Salary income (A) = 900000
Exemptions under Section 10 (B) = 80000
Salary minus exemptions (C=A-B)= 820000
Deductions under Chapter VI-A (D) =100000
Taxable Income (E=C-D) = 720000
Tax on the above taxabale income is calculated as below.
Exemption (F) = 150000
Tax upto 3 lakhs (3 lakhs - F) * 10% (G) = 15000
I know this is a bit confusing for the beginner. But our tax laws are complex and it needs some getting used to.
Try it and verify the same with income tax calculator provided here - http://law.incometaxindia.gov.in/Taxmann.