Easy Steps To Calculate Your Taxable Income : 

What is taxable income? How can you calculate taxable income? All your questions answered

One of the most common questions that pops up during the tax filing season is ''What is my taxable income? ’The best answer for this could be a counter-question: ''What is not taxable?’

Why is this the best reply? This is because, in India, all income is taxable, unless it is specifically excluded.

Before knowing how to calculate taxable income from salary, however, you need to first calculate your total income.

First, tally your income from various sources.

For example, let’s say you are a bank employee in Bangalore, earning a monthly salary. You own a residential property, from which you earn rent. You also earn from the sale of assets, equities. This comes under income from capital gains. So, your total income is the sum of your salary, rental income, and capital gains.

Next, subtract the tax-free earnings from the total income. These would be, for example, gains from equity shares if held for more than a year.

What is the formula to calculate taxable income?

A simple formula to calculate your taxable income gives you the final result:

Taxable income = Gross income – (deductions + exemptions)

Now, you can calculate the taxable income under Indian IT laws using the current, applicable tax rates.

What are the steps to calculate taxable income?

Total Taxable Income = Gross Total Income – Deductions / Exemptions allowed from Income

Total Taxable Income = 693600 + 40000 – (15000 + 14000 + 6500)

Total Taxable Income = 733600 – 35500.

Total Taxable Income = 698100