I often get request to calculate income tax for readers and how they can save more tax! It’s not possible for me to calculate it for everyone. So going forward I would pick cases and show how to calculate income tax and if there is scope to save additional tax.
Below is the comment I received:
Pl calculate my income tax.
I would retire on 31 Jul 2018. My income from Apr 18 to Jul 18 is Rs. 2,50,000. Thereafter I would get pension @ Rs. 18,700 per month. As on 31 Mar 19 estimate interest on my FDs is Rs. 2,15,000. I have invested Rs. 2,00,000 in senior citizen scheme. Pl confirm how much income tax I have to Pay?
Download: Tax Planning Guide for FY 2018-19
Income Tax Calculation:
As far as possible I would use the format used in filing income tax returns so that its more helpful for everyone.
We first calculate the total income for the financial year (FY 2018-19)
- Income from Salary (April to July 2018) – Rs 2,50,000
- Income from Pension (August’18 to March’19) – Rs 1,49,600 (Rs 18,700 * 8)
- Income from Interest on Fixed Deposit – Rs 2,15,000
Total Income = Rs 6,14,600
The table below calculates the income tax:
The total tax comes out to be Rs 3,879 which is just 0.63% of his income. This is lower than what he would have paid last financial year due to newly introduced Standard Deduction on Pension Income and Section 80TTB (exemption up to Rs 50,000 on interest income).
Read to know more: 5 Good News for Senior Citizens in Budget 2018
Recommendation to Save more Tax:
Disclaimer: The recommendation is made based on limited information we have!
As he pays very little tax there is nothing much to worry. He could have paid even lesser if he could take following tax benefits:
- Sec 80GG in case you live on rent and do not own a house (deduction up to Rs 60,000)
- Section 80D for Health Insurance Premium
Also for senior citizens SCSS is one of the best investments for regular income. So he choose the right investment for tax saving.
Also Read: Best Tax Saving Investments u/s 80C
Let me know if this was helpful and you have any other suggestions!