Calculate Income Tax in Excel (Table Contents)
Introduction to Income Tax in Excel
A user can calculate n number of things in MS Excel in a few steps; one of them is the calculation of the Income Tax. There are two ways of income tax deduction from the incomes if a user is working in some company, they will deduct all income-related taxes from the user’s salary where the user needs to declare the income tax himself.
How to Calculate Income Tax in Excel?
Let’s understand how to Calculate Income Tax in Excel with some examples.
Example #1 – Calculate Simple Taxable Income and Income Tax of that Income
Let’s assume Ravi’s income details are given in sheet 1; his salary is 2.5 Lakhs, total exemptions are 75000, total deduction 20000, there will 5 % tax on income below 2.5 Lakhs which the government imposes. Now Ravi wants to calculate his taxable income, and he needs to pay the tax in the current financial year.
Let’s see how a user can calculate his taxable income and income tax.
Step 1: Open MS Excel; now go to Sheet1, where Ravi’s income details are available.
Step 2: As the user wants to calculate the taxable income and tax on the income >> create two rows to calculate the taxable income and tax on the income.
Step 3: First, a user needs to calculate the taxable income >> click on cell B6, subtract the exemptions and deduction amount from the total income >> write the formula in B6 =” B2-B3-B4”. Press the Enter key.
Step 4: Now, Taxable income will come, which is 1.55 Lakh.
Step 5: Now calculate the tax that needs to be paid on the taxable income >> Tax is 5% below 2.5 lakhs income >> Now calculate 5% of the taxable income. Write the formula in cell B7 >> “=B5*5/100”.
Step 6: Press the Enter key.
Summary of Example 1: As the user wants to calculate his taxable income and the tax need to be paid by him in the current financial year, it is calculated in the above example. Ravi’s taxable income is 1.55 Lakh, and he needs to pay 7750 Rupee as the income tax.
Example #2 – Calculate Taxable Income and Income Tax with Different Tax Slab
Let’s assume a user’s income details are given in sheet 2; his salary is 28 Lakhs, total exemptions are 5.5 Lakhs, total deduction 2.3 Lakhs, the government gives tax slab. Now the user wants to calculate his taxable income and the tax need to pay by him in the current financial year.
Let’s see how a user can calculate his taxable income and income tax needs to as Income tax to the Government.
Step 1: Now go to Sheet2, where the user’s income details and tax slab is given.
Step 2: The user wants to calculate the taxable income and tax on the income >> So two rows were created to calculate the taxable income and tax on the income A column.
Step 3: First, a user needs to calculate the taxable income >> click on cell B6, subtract the exemptions and deduction amount from the total income >> write the formula in B6 =” B2-B3-B4”. >> click the enter button.
Step 4: Now, Taxable income will come, which is 20.20 Lakhs.
Step 5: Now calculate the tax which needs to be paid on the taxable income >> it is coming in the 4th slab, which is Rs. 20 – 30 Lakhs= 20% >> Now calculate 20% of the taxable income.
Step 6: Write the formula in cell B7 >> “=B5*20/100”.
Step 7: Press the Enter key.
Summary of Example 2: As the user wants to calculate his taxable income and the tax need to be paid by him in the current financial year, it is calculated in the above example the user’s taxable income is 20.20 Lakhs, and he needs to pay 4.04 Lakhs Rupee as Tax as the income tax.
Example #3 – Calculate Taxable Income and Income Tax with Different Tax Slab and Tax Surcharge
Let’s assume a user’s income details are given in sheet3; his salary is 90 Lakhs, total exemptions are 15 Lakhs, total deduction 9.8 Lakhs, Tax slab and surcharge details are given by the government. Now the user wants to calculate his taxable income and the tax need to pay by him in the current financial year.
Let’s see how a user can calculate his taxable income and income tax need to as Income tax to the Government.
Step 1: Now go to Sheet3, where the user’s income details and tax slab is given.
Step 2: The user wants to calculate the taxable income and tax on the income >> So two rows are created to calculate the taxable income and tax on the income A column.
Step 3: First, the user needs to calculate the taxable income >> click on B6 Cell subtract the exemptions and deduction amount from the total income >> write the formula in B6 =” B2-B3-B4”. >> click the enter button.
Step 4: Now, Taxable income will come, which is 65.20 Lakhs.
Step 5: Now calculate the tax which needs to pay on the taxable income >> it is coming in the 3rd slab, which is Rs. 10 – 30 Lakhs and above = 30% >> Now calculate 30% of the taxable income. Write the formula in B7 cell >> “=B6*30/100”.
Step 6: Press the Enter key.
Step 7: As the income is more than 50 Lakhs, there will be a 10% Surcharge for Income.
Step 8: Now calculate the total tax need to pay by the user. So, add the tax on income and surcharge taxes.
Summary of Example 3: As the user wanted to calculate his taxable income and the tax need to pay by him in the current financial year, it is calculated in the above example User’s taxable income is 65.20 Lakhs, and he needs to pay 21.516 Lakhs Rupee as Tax as the income tax.
Things to Remember About Calculate Income Tax in Excel
- Gross total income comes from calculation income from all sources.
- If a user doesn’t have any type of Exemptions and deduction, then Gross total income will be the same as taxable income.
Recommended Articles
This is a guide to Calculate Income Tax in Excel. Here we discuss How to Calculate Income Tax in Excel along with practical examples and a downloadable excel template. You can also go through our other suggested articles –
